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Am I eligible for equity release?
Equity release can free up some of the value stored in your home and turn it into cash. This can be received as a tax-free lump sum, or as smaller payments over time.
Your equity release eligibility will depend on several factors, such as your age and the value of your home. If you’re over 55, then an equity release mortgage could help you unlock some of the money in your property.
However, you'll need to pay the cash sum back eventually, usually with interest.
Reasons for releasing equity from your home
People release equity in their home for different reasons. Equity release enables you to release money from your home without worrying about monthly repayments. You could use the money to pay off debts, make home improvements, help a family member to buy their first home or go on holiday.
One way of releasing equity involves taking out a lifetime mortgage. You can release a percentage of your home’s value as cash. You won’t have to move and you’ll continue to own your home. The amount you borrow is usually paid back when your house is sold following the death or move into long-term care of the last remaining borrower.
You can take the money as a tax-free lump sum or smaller amounts over time and use this to help fund your retirement, or gift to family.
Important considerations of equity release
If you’re wondering if a lifetime mortgage could help you, it’s important to be mindful of the features and considerations. Some examples of these are detailed below but your adviser will always discuss your needs and circumstances to decide if a lifetime mortgage is right for you.
- After interest, you'll owe more than you borrowed, if you don’t make any payments.
- You could owe more than you borrowed if your house value drops.
- You reduce the value of inheritance that could be passed to your loved ones.
- Choosing to terminate your contract early may incur early repayment charges.
- You can take a cash lump sum, or a lump sum and then smaller amounts over time.
- You'll continue to own your home until the mortgage needs to repaid upon death or long term care of the last surviving borrower.
- You can set aside some of your home’s value to be passed on as inheritance however this may be reduced if you take a lifetime mortgage.
- No monthly payment is needed but interest will continue to be added to the amount owed.
- You may have the right to move to another property (subject to lending policy and criteria at the time) without having to pay any early repayment charges.
- You'll be protected by the ‘No Negative Equity Guarantee’ meaning your estate won’t have to repay more than what your home sells for even if you owe more.
- Taking out a lifetime mortgage could affect your entitlement for means-tested benefits.
- You can make some overpayments over the life of the mortgage without penalty but, early repayment charges may be payable if you want to repay more or repay the mortgage in full. These do not apply on death or moving into long term care.
What are the eligibility requirements for equity release?
Equity release eligibility depends on several factors. These can include:
- Age - There will be a minimum and maximum age that you'll need to meet.
- Property Value - Your home will need to meet a minimum value.
- Applicants - Maximum number of applicants is usually two.
- Ownership - You own your property and it is your main residence.
- Location - Your home is located in England, Scotland or Wales is most commonly accepted. A small number of lenders will lend in Northern Ireland and other isles.
- Property Construction - If your home is of ‘standard construction’ i.e. bricks or stones, pitched tile roof however other construction types can be acceptable to some lenders.
- Property Condition - Your home must be in good condition and a valuation will need to take place to confirm this.
Find out if you can apply for a Scottish Widows Bank Lifetime Mortgage by using our Lifetime Mortgage Checker.
If you qualify, we'll arrange for you to talk to an expert Scottish Widows Bank Later Life Lending Adviser at a time that suits you.
Or, you can give us a call.
Equity release FAQs
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Equity release works by releasing the equity in your home as a cash lump sum. The money borrowed and interest are usually repaid from the sale of your home when you, or the last borrower, pass away or go into long-term care.
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Yes, you can be turned down for equity release. You or your home may not meet the criteria for a successful application however, your adviser will be able to look at that when assessing your options.
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Not always. Most lifetime mortgages do have an interest rate that is fixed for life however, there are some variable interest rates available which come with a cap to make sure that the rate will never go over a certain percentage.
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Start by inputting your information into our Lifetime Mortgage Checker.
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Releasing equity can be a good idea and help you meet your needs however, it is completely dependent on your own individual circumstances and you should make sure you understand any implications as well.