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How to meet equity release criteria and rules

Article | Jun 2024

If you are reading this article, you might be well on your way to meeting an adviser and finding out more about equity release. If successful in your application, you will unlock the potential benefits of releasing equity from your home.

These benefits include being able to get a tax-free lump sum to spend in a variety of ways. You could perhaps gift an early inheritance, make some home improvements, or even buy a second home with the money.

However, there are some things that you should consider before making an equity release application. There are some equity release rules and criteria that you will need to meet before you are able to release equity from your property.

Responsible Life specialise on providing expert advice on all things equity release. Our advisers will be able to help with any questions you might have on applying for equity release.

In this article, we will break down the things you will need to know to learn whether you meet the equity release criteria and rules.

What is the minimum age for equity release?

In order to be eligible for equity release you will need to be one of the homeowners of the property. The youngest homeowner must also be over the age of 55.

It is worth considering that the older the youngest homeowner of the property, the more money you could release in equity from your home.

Responsible Life’s advisers will be able to talk you through all the information you need on how to make sure you meet the age and homeownership criteria for equity release.

Make sure you have consulted with an expert

Whether you opt to use Responsible Life’s equity release advisers or another provider, you will be required to consult with an expert before making an equity release application.

A trained adviser will be able to sit down with you and give you a recommendation on whether it’s right for you. There are other options available instead of equity release that are sometimes the better option depending on your personal financial circumstances.

So, your adviser will also explore whether a traditional mortgage or Retirement Interest-Only Mortgage would better meet your needs. They will also walk through the pros and cons of releasing equity. This includes the fact that the value of your estate will be reduced, and that your entitlement to means-tested benefits could be affected.

If your adviser recommends going ahead with equity release, they will also be able to help you fill in your application. This help will be invaluable when it comes to ensuring your application meets the equity release criteria and rules.

If you opt to go with Responsible Life’s advisers, they will also be able to provide you with lifetime care. This means that they will check in on you at key points in your equity release journey to make sure you are happy with the outcome. They can even assess whether you could save money by moving to a lower rate if one is available in the future.

What impact does a home valuation or a current mortgage have?

The first thing to be aware of is that having a current mortgage on your home does not stop you from being able to release equity.

However, if you have a mortgage, you can’t release equity in your property and keep that current mortgage in place. You can though use equity release to pay off your mortgage – this is one of the main reasons people take out equity.

Your home’s valuation impacts the amount of money you can receive by releasing equity. The larger the full valuation of your property, the more money you could take out in equity. However, as long as your home valuation is above £70,000 you could be eligible for a Lifetime Mortgage.

A valuation could also have an impact on your eligibility. For example, if your home is valued lower than your initial estimate at application, the offer that a lender is willing to give might change. Equally, you could end up with better terms if the value of your home turns out to be higher.

To get an estimate of the amount that you might be able to release from your home, use our free online calculator today.

Need more information?

If you feel you need any more information about the equity release rules and criteria you need to meet to be eligible, schedule a call with our Information Team today! They can answer your initial questions and help you to book an appointment with one of our advisers.

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