If you’re aged 55 or over, own your property, and 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 (available from age 55), which is paid back by selling the property once you die or move into long-term care, or a home reversion scheme (typically available from age 60), where you sell all or part of your home in return for a tax-free lump sum or regular payments.
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 provides a loan secured against your home (or pays for a share of it). This loan won’t be settled until you leave your home, instead of paying it back via monthly payments 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 is most definitely still possible. Because standard equity release does not require you to make monthly repayments, lenders do not conduct the same strict affordability checks as they do for standard mortgages. However, your credit file does still matter.
If your credit search reveals severe adverse credit such as active County Court Judgements (CCJs), an Individual Voluntary Arrangement (IVA), or a charging order against your property, lenders will typically require these debts to be paid off using the equity you release at completion. If you have a past bankruptcy, you must be fully discharged before applying. Our specialists know exactly how to structure these applications so your debts can be cleared simultaneously.
There are two main types of equity release plans in the UK: a lifetime mortgage and a home reversion plan.
A lifetime mortgage is a loan secured against your property, giving you tax-free money that is paid back when your house is sold (usually when you pass away or move into permanent care). You do not need to own your home completely outright to apply; however, if you still have an existing mortgage, you must use some of the equity released to pay it off entirely.
The older you are, the higher the percentage of your property’s value you will be able to borrow (starting at lower percentages at age 55 and rising as you age). Interest will start to accumulate as soon as you take out the loan. Many modern lifetime mortgages allow you to make voluntary interest payments gradually instead of letting the debt roll up, protecting more of your estate’s value for your inheritance.
A home reversion mortgage is when you sell a percentage (or all) of your property to a home reversion provider. They will pay you less than its current market value, but you retain a lifetime lease, meaning you are guaranteed to be able to live in the home rent-free for the rest of your life.
Depending on the provider, 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 agreed percentage share of the sale proceeds. If the value of your house has risen, so will the cash value of the provider’s share.
Not sure which one to go for? We have specialists on hand to guide you.
Whatever your current property goals are, finding the right specialist lender requires expert market knowledge. Whether you are focused on this specific step or exploring other borrowing options, Adverse Mortgage Advisors is here to guide you. Visit our complete mortgage help hub to explore dedicated advice for first time buyers, home movers, landlords, and anyone needing to navigate the property market with a complex credit history.
Releasing equity from your home is a big decision that impacts your estate and entitlement to means-tested benefits, so it’s essential to speak to qualified specialists before you take the plunge. Our expert advisers have the experience to offer sound, regulated equity release advice, so you can work out whether unlocking money from your property is the best and safest option for you.
Contact Adverse Mortgage Advisors today to see how much equity you could release.
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.
