Downsizing
A smaller or cheaper home can free up money without any borrowing, but remember to allow for the costs of moving.
Equity release at a glance
The "equity" in your home is the part you own outright, which is its value less any mortgage. Equity release lets homeowners aged 55 and over take some of that value as money without having to move.
The money can be taken as one lump sum, in stages as you need it, or in some cases as a regular income. Most people use a lifetime mortgage, which is a loan secured against the home. The other route is a retirement interest-only (RIO) mortgage, where you pay the interest each month. Lifetime mortgages and RIO mortgages are the only types of equity release I advise on, so they're the focus of this guide.
It can work well for some people, but it's a long-term commitment with real costs, so there's no need to hurry.
Retirement interest-only (RIO) mortgages
You pay the interest each month with a RIO mortgage, so the amount you owe doesn't grow. The loan is repaid when the last borrower dies or moves into long-term care. Your income needs to cover the payments, both now and in the future, which means it isn't right for everyone.
Step by step
The process, from the first call to the money arriving
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Talking it through
We have a free, no-obligation chat about your home, your finances, what the money would be for and how your family feel. Feel free to bring someone with you.
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Comparing your options
We consider whether equity release suits you, alongside the alternatives. I explain the costs and risks of each, so you can compare them fairly.
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Your recommendation
If equity release makes sense, you'll receive a personal recommendation in writing, with a personalised illustration of the costs and how the loan could grow. You then have time to read it and think.
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A solicitor of your own
A solicitor, independent of the lender, will be appointed to take you through the paperwork.
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The lender's checks and offer
The lender values your home and checks the details. If all is in order, it sends a formal offer. This usually takes a few weeks, depending on the lender and the solicitors.
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Completion
When everything has been signed, the money is released. Any existing mortgage is repaid first, and the remainder goes to you.
Include your family. Equity release affects what's left for your family, so it usually helps to involve them from the start. Many people ask them to join the first conversation, in the room or on the phone.
Who it's for
Who qualifies?
- You're aged 55 or over. For couples, everyone named on the plan normally needs to meet the minimum age.
- You own your home in the UK. Leasehold homes may be accepted, depending on the lease.
- The property is worth enough, as lenders set a minimum value.
- If you have a mortgage, it can normally be repaid from the money you release.
How much could you release?
Age and property value matter most. As a general rule, the older you are, the more a lender may be willing to offer, and some lenders offer more for certain health or lifestyle conditions.
Our calculator shows a rough figure in about a minute. It's only an estimate: what you're actually offered depends on the lender and your circumstances.
Be aware
The downsides
Equity release isn't right for everyone. The main things to weigh up are:
- The debt grows. If interest isn't paid, it's added to the loan and then earns interest itself, so the amount owed can grow quickly over many years.
- There's less left for your family. It reduces the value of your estate.
- It may affect benefits. Extra money may change your entitlement to means-tested benefits, although that's not always the case.
Your protections
Equity Release Council standards
Avalon FS is a member of the Equity Release Council, whose standards are designed to protect you. Its members commit to standards including:
- The right to stay in your home for life, provided you keep to the terms of the plan
- A no negative equity guarantee: you'll never owe more than your home is worth
- The right to move to another suitable property, subject to the lender's criteria
- Fixed or capped interest rates for life
- Independent legal advice before you commit
What will it cost?
Costs vary from plan to plan, so ask for them all in writing. They may include:
- Interest, which is usually fixed or capped for life and often added to the loan.
- Arrangement, valuation and legal fees.
- Early repayment charges if you repay or move before the plan ends.
- My adviser fee, which is £895. I'll confirm it in writing before you go ahead.
And later on?
A lifetime mortgage lets you stay in your home. The loan and any interest built up are usually repaid when the last borrower dies or moves into long-term care, normally through the sale of the home. Anything left afterwards goes to your estate.
You'll be expected to keep the property in good repair and insured for as long as the plan runs.
Other routes
What else could you do?
Sometimes the best answer is not to release equity at all. I'll talk each of these through with you.
Other borrowing
If you can comfortably afford the monthly repayments, a standard mortgage or loan may be cheaper. Lenders may limit borrowing by age.
Help from family
Some families are able to help. If yours can, agree the terms clearly and write them down.
Benefits and support
Make sure you're getting everything you're entitled to, such as Pension Credit or Attendance Allowance. Age UK and the government's benefits calculator can help.
Savings and pensions
You might have savings or pension options to draw on instead. Free, government-backed guidance such as Pension Wise is available for many over-50s.
Questions about any of this?
There's no obligation and no pressure. Try the calculator for a rough idea, or get in touch and we'll talk it through.