How does Equity Release work?

What is Equity Release and how does it work?

Equity Release is a way to unlock tax-free cash from your home, even if you still have a mortgage. You can do this from age 55, and if it's right for you it can be a great way to give you access to some extra money.

The way Equity Release works depends on the type of plan.

Equity Release may involve a Lifetime Mortgage which is secured against your property or a Home Reversion Plan. To understand the features and risks, ask for your personalised illustration. Equity Release requires paying off any existing mortgage. Any money released, plus accrued interest would be repaid upon death, or moving into long-term care.

Our starter guide can help if you’re new to Equity Release and want to know the basics first. It’s the best place to start:

What is Equity Release

Types of Equity Release

There are four main types of Equity Release plan to think about. They each have different rules around repayments, what this will mean for your home and more.

Keep in mind: If you choose a type of Equity Release that pays you a loan, the loan and any interest will be repaid after your death or if you enter long term care.

All types of Equity Release will lower how much money you have to leave behind as inheritance. It might also affect any means-tested benefits you could get.

How much tax-free cash can you release?

The amount of tax-free cash you can release depends on how much equity you have in your home. Equity is how much your home is worth minus any outstanding mortgage you still have to pay off.

For example: If your home is worth £250,000 and you have paid off your mortgage, you’ll have £250,000 equity. Another example is if your home is worth £300,000 and you have a mortgage of £50,000, you’ll have £250,000 equity.

The amount of equity you can release from your home will depend on a number of things, from your age to your personal circumstances.

Keep in mind: You won’t be able to release the full value of your home.

You can use our free Equity Release calculator to see how much you could release.

How much does Equity Release cost?

You have to take advice before you can release equity from your home. You’ll have to pay for your advice, which is usually calculated as a percentage of the money you release. There can also be other costs in setting up your plans so it’s worth looking into the provider’s fees and charges.

It's important to get advice

Releasing money from your home is a big decision. You’ll need to get advice to make sure it’s the right option for you, as there are other income options available to you.

If you choose to go through us, you can get some advice for free from Age Partnership. You don’t have to continue after taking advice, but if you decide to go ahead, there is a flat fee of £1,795 applied. This comes off the amount paid out to you, so you don’t need to send us any payment.

Age Partnership will pay Standard Life Client Management an introductory fee if you decide to take out a product. This is based on a percentage of the product value. Please get in touch if you need more information on this.

Interested? You can call our experts at Age Partnership to get started (call charges will vary).

0800 056 1606