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.
Equity release allows homeowners, typically retirees, to access the value of their property without selling it.
There are two main types: lifetime mortgages, where you borrow against your home's value, and home reversion plans, where you sell part or all of your home.
It can provide extra income, but it's important to consider the impact on inheritance and benefits.
Consulting a financial advisor specialising in equity release is recommended.
Equity release works by allowing homeowners, typically retirees, to access the value of their property without selling it or moving out. There are two main types of equity release schemes: lifetime mortgages and home reversion plans.
In both cases, you can continue to live in your home until you pass away or move into long-term care. The amount you can borrow or sell depends on factors such as your age, the value of your property, and the provider's criteria.
Equity release can provide a source of income or a lump sum for retirees to supplement their pension or fund other expenses. However, it's essential to consider the implications carefully, as it can reduce the inheritance you leave behind and affect your entitlement to means-tested benefits. Seeking advice from a financial advisor specialising in equity release is recommended before proceeding.
When you die, with equity release depending on what plan you have this is what happens:
Your beneficiaries receive any leftover equity after debts and the provider's share are settled.
It's important to discuss this with them and get advice from a financial advisor specialising in equity release.
Equity release can affect some types of means-tested benefits, including Pensions, Council Tax Support, Housing Benefit, and Universal Credit if you save enough of your tax-free lump sum to push you over the relevant threshold.
Currently, you must have £16,000 or less in money, savings, and investments.
Speaking with a financial adviser or benefits specialist can help you understand how equity release might affect your benefits and explore any alternatives or mitigating circumstances.
Yes, you can release equity from your property with bad credit. Equity Release mainly focuses on your age, health conditions and the property type as well as condition of the property. However, having credit issues may limit the lenders available.
Some providers offer products tailored to individuals with bad credit, but the terms may not be as favourable. It's important to consider the impact carefully and seek advice from a financial adviser specialising in bad credit mortgages.
A Transfer of equity is a legal process where the ownership of a property is transferred from one individual or entity to another. The transfer often involves adding or removing individuals the properties title deeds.
