Frequently Asked Questions

With current interest rates so low, you might regard the 3-5% interest rates currently being offered as not bad, but remember that is much higher than a standard mortgage. If you do opt for a plan where you don’t pay back the interest, the figures can be grow fast, often doubling every 15 years or so.

There are also the costs involved in setting the plan up in the first place. Most authorities suggest that you need to budget £3,000 for these.

Equity release is safe as it’s regulated by the Financial Conduct Authority (FCA) and overseen by the Equity Release Council (ERC). Their rules and safeguards ensure you always own your home and have flexibility to move.

In addition, all FCA and ERC governed lifetime mortgages come with a no negative equity guarantee, which means that when the property is sold and solicitors and agents fees have been taken into account, if the amount left is not enough to pay the outstanding loan, neither you or your estate will be liable to pay any more.

To be certain that your equity release scheme is safe, you just need to ensure the company you choose is a member of the Equity Release Council.

You retain complete ownership of your home and have the right to remain there for the rest of your life. If you have taken out an equity release product with your partner, the loan only has to be repaid when the last deed holder has passed away or entered long-term care.

A major concern for many people considering equity release is the risk of their property going down in value. Since most people do not make payments towards the loan, it is easy for the amount outstanding to shoot well above the value of the property.

Thankfully, you can protect yourself against this risk. You should ensure that any equity release mortgage you consider has a negative equity guarantee. This guarantee means the amount borrowed plus the interest you owe on the loan will never exceed the sale price of the property. This will prevent any negative equity and consequent mortgage debt being passed onto the executors of your estate in the event of your death.

A no negative equity guarantee on an equity release mortgage means the borrower will never owe more than the value of their property and all plans approved by the Equity Release Council must offer this promise.

Yes, it is likely that equity release will impact the total amount of inheritance you leave to your children. However, this is not to say that all equity release products inhibit you from being able to leave any more to your beneficiaries.

Equity release will usually still leave you with an inheritance amount, and this is how. Equity release provides homeowners over 55 with a large cash sum for their property which is tax-free. These homeowners will be able to remain in their home till death or going into long-term care and pay interest each month on the equity release amount taken out.

Equity release companies recover their funds when your home is eventually sold. Proceeds from the sale are given partly to this firm and in most cases, there is still money left over afterward.

In addition, if you so wish, there is no reason whatsoever why it isn’t possible to leave as an inheritance the original lump sum you took out as equity release.

Equity release funds are tax-free and can be used for anything you wish (providing it is legal). The most popular uses of equity release funds are: repaying mortgages and unsecured debt, home improvements, supplementing income, purchasing properties, and helping family.

But these are not the only uses for equity release. We have helped hundreds of other clients use equity release to pay for a wide array of products and services, including:

Inheritance Tax Planning
Pay for boat repairs
Buy holiday homes
Pay tax bills
Paying solicitors fees
Pay court fees
Buying co-owner out of a property
Lease extensions on lease-hold properties
Paying for cosmetic surgery
Paying for school/university fees

Some lenders and financial advisors may restrict some of the use of funds. Any restrictions in place are designed to protect the lender and the client.

This can depend on how long your solicitor takes to do the legal work, but it’s usually around six weeks from when your application is accepted to the money arriving in your account.

National Equity Release works with trusted local Equity Release Advisers who can provide you with everything you need. The benefit of using our free service is that you will be put in touch with a highly rated adviser who is fully certified, FCA regulated and a member of the Equity Release Council. Use our quick calculator now to get started with an estimate and a free 15 minute consultation with a specialist.