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What does equity release mean for your home?

Article | Jun 2024

If you are thinking about making an application for equity release, there are a number of things you should consider. Using a qualified equity release adviser is a requirement and will ensure you get access to all the information you need to see if releasing equity in your home is right for you.

Responsible Life specialise in providing advice on a range of equity release and mortgage options. Our advisers also talk through all the alternatives and product options, and help you work out if your circumstances qualify you for equity release.

One of the main questions our advisers are asked during the equity release application process is ‘what does equity release mean for your home?’ This is a topic that has generated a few myths over the years, but there’s no need to wonder about this any longer.

In this article, we will break down all you need to know about what releasing equity from your home means for your property.

Does equity release mean I'll be selling my home?

There is a type of equity release product called a home reversion plan, that will involve you selling all or part of your home as part of the process. However, at Responsible Life we don’t believe that they offer good value to homeowners. That is why we only offer an equity release product called a Lifetime Mortgage, that guarantees you will remain the homeowner.

At Responsible Life, we are Lifetime Mortgage specialists. With this option you could borrow a tax-free lump sum of money from the value of your home. This will then be repaid once the last homeowner passes away or enters long-term care, often with the proceeds of the sale of the home. Therefore, with Lifetime Mortgages, you don’t sell any part of your home to the lender.

However, it is worth keeping in mind that depending on the lender you use, there might be certain conditions for your home with equity release. This could be ensuring that any repairs are made when needed, and any changes you make to your home are first approved by the lender.

Does equity release mean I can't move home in the future?

Releasing equity from your home does not mean that you can’t move in the future. In fact, the right to “port” your Lifetime Mortgage to another property is guaranteed by the Equity Release Council.

However, this guarantee is subject to the lender’s criteria. You won’t be able to move it to a home that falls outside of suitable security for your loan. Additionally, if you want to move to a property that is worthless than your current home, you might need to repay some of the Lifetime Mortgage first. This might come with an early repayment charge.

So, you can release equity from your home with the peace of mind of knowing that it won’t necessarily impact any future house moves you want to make. If a move might be in your future, let your adviser know and they will be able to take this into consideration as a part of the advice process.

What about the value of my estate?

Equity release is a long-term loan secured against the value of your home. It doesn’t need to be repaid until you either pass away or enter long-term care. As such, the value of your estate will be reduced.

You should also know that releasing a tax-free lump sum could affect your entitlement to means-tested benefits.

Can I release equity from my home if I have a mortgage?

This is a question that is often asked when homeowners are considering equity release. The simple answer is yes. You are still eligible to apply for equity release as long as the existing mortgage is cleared by the time you complete your equity release plan.

A common reason for homeowners releasing equity in their homes is actually to help clear their existing mortgage. If you choose to do so in this way, the equity release lender will release your funds to your solicitor who will then transfer it directly to your previous mortgage lender. Any leftover funds will then be released to your bank account.

Need more information?

If you feel you need any more information about what equity release means for your home, you can schedule a call with our friendly UK-based Information Team today! You can also call them up now on 0800 048 5807.

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