Understanding equity release
How thousands unlock tax-free cash from their homes each year.
If you’re a homeowner aged 55 or over, you may be able to unlock the value that has built up in your home as tax-free cash to help you supplement your later life finances.
Each year, thousands of people take out equity release plans. According to the Equity Release Council, in 2023 the average amount borrowed by new customers stood at £97,878 – how would you use a lump sum of tax-free cash?
Calculate how much you could unlock
How does equity release work?
To unlock equity from your home you must be aged 55 or over, and your property must be worth at least £70,000.
The amount of money that you can access is determined by the age of the youngest homeowner and the value of your home, the lowest amount you can release is £10,000.
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There are two main types of equity release, a home reversion plan, or a lifetime mortgage.
The most popular, a lifetime mortgage, allows you to continue to own 100% of your home.
With a home reversion plan, you sell all or part of your property in return for a tax-free lump sum or smaller amounts over time, but you can continue to live in your home as a tenant, paying no rent.
One of the main benefits of equity release for many people is you’re not required to make any repayments if you don’t wish to, as the money you unlock, plus accrued interest, is only repaid when you die or move into long-term care.
However, there are plans that allow you to make voluntary payments, subject to certain limits, and you can choose the amount that suits you. By doing this, you can reduce the amount of debt that is rolled up. Early repayment charges may apply above a set value.
All equity release plans are secured against your property and will reduce the value of your estate and impact funding long-term care.
Calculate how much tax-free cash you could release
Is equity release right for me?
It’s a requirement to get advice before proceeding with equity release. An advisor such as Age Partnership Ltd, who are a member of the Equity Release Council, will take you through all your options with a no-obligation quotation to ensure it is the right decision for your individual circumstances.
Your advisor will take the time to understand your needs and assess how your entitlement to means tested benefits could be affected, now or in the future.
It could be that downsizing, speaking to family, or taking in a lodger could be a more suitable way to raise funds.
You may be concerned about passing debt on to your family, but equity release plans that meet the Equity Release Council’s product standards come with a no-negative-equity guarantee, which means your estate will never owe more than your property is worth when it is sold.
There are also plans that allow you to safeguard a percentage of your property’s value so that you can pass this on to your loved ones.
Request your FREE guide written by Radio Times Paul Lewis
Through Age Partnership+, initial advice is provided for free and without obligation. Only if your case completes would an advice fee of £1,995 be payable. Other lender and solicitor fees may apply.
The Radio Times equity release service is provided by Age Partnership Limited. Radio Times is a trading name of Immediate Media Company London Limited which is an Introducer Appointed Representative of Age Partnership Limited, 2200 Century Way, Thorpe Park, Leeds LS15 8ZB. Company registered in England and Wales No. 5265969. VAT registration number 162 9355 92. Age Partnership Limited is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432 and is trading as Age Partnership Plus.
