If you’re aged 55 or over and own your property but require some extra funds, equity release could be a good option for you.
It allows you to unlock money from the value of your home in one large lump sum or smaller amounts over time to spend how you wish.
You can choose between a lifetime mortgage, which is paid back by selling the property once you die, or a home reversion scheme, where you sell all or part of your home in return for payment.
However, equity release can sometimes be an expensive route to take, so it’s important to look into all your options before making a decision – our equity release advisers have the expertise to help you with this.
An equity release mortgage is when a lender pays for a share in the sale of your property. This loan won’t be settled until you leave your home, instead of paying it back over a set term like a normal mortgage.
But what if you have a poor credit history? You might be wondering whether equity release is still an option.
The straightforward answer is yes, it’s most definitely still possible. Since equity release isn’t credit profile or affordability driven, no matter what your credit history is like, it won’t significantly affect your chances of getting an equity release mortgage. Instead, lenders are more interested in your age and health.
There are two main types of equity release loans, a lifetime mortgage and home reversion mortgage.
A lifetime mortgage is secured against your property, giving you tax-free money that is paid back when your house is sold once you die. As long as you’re 55 and own your property outright, you can borrow up to 60% of your property’s value.
Usually, the older you are the more money you will be able to borrow and you won’t have to pay it back until you die. Interest will start to accumulate as soon as you take out the loan and is higher than a normal mortgage. Some lenders can let you pay off the interest gradually instead of letting it build up, whereas others won’t allow this.
A home reversion mortgage is when you sell some or all of your property to a home reversion provider. They will pay you less than it’s worth, but you’re still able to live in the home for as long as you like.
Depending on the type of home reversion mortgage, you can get the money in one large sum or in regular instalments.
When you move out of the property to a care home, or when you die, your house will be sold and the provider will take their share. However, if the value of your house has risen, so will the provider’s share.
Not sure which one to go for? We have specialists on hand to guide you.
Releasing equity from your home is a big decision, so it’s best to speak to specialists before you take the plunge. Our equity release advisers have the experience to offer sound equity release advice, so you can work out whether unlocking money from your property is the best option for you.
If you have questions about getting a mortgage with an adverse credit score, read our FAQs. Our wealth of knowledge within this market means that we’re confident in our ability to offer specialist mortgage advice and secure the mortgage you want regardless of your credit history.