EQUITY release allows homeowners aged 55 and over to unlock the equity that has built up in their homes as tax-free cash. But is equity release a good idea for you?

It may allow you to unlock from a minimum of £10,000 up to 53% of the value of your property – providing it is worth at least £70,000.

The exact amount of money that you can access is based on the age of the youngest homeowner, the value of your home, and your individual needs.

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What are the advantages of equity release?

It can be a flexible option with many different plan features to suit individual needs and requirements. For example, you can choose how you take the money you release, either as a lump sum or in smaller amounts over time.

One of the main benefits of equity release for many people is you’re not required to make any repayments if you don’t wish to, as the money you unlock, plus accrued interest, is repaid when you die or move into long-term care. 

Plus, with a lifetime mortgage, the most popular type of equity release plan, you continue to own 100% of the home you love.

Another advantage is that the money you unlock can be used for a variety of reasons; a new car, holiday, or even providing a financial gift to loved ones. As long as any existing mortgage is repaid first, the money is yours to enjoy spending.

Plans which meet the Equity Release Council’s standards feature a no negative equity guarantee.  This means that your estate will never owe more than the property is worth when it is sold.

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What are the drawbacks?

With equity release, interest can build up over time on the amount you borrow which can be a significant amount.

With a lump sum plan where you take all the money in one go, you know exactly how much this will be when you take the loan.

With a drawdown plan, where you take the money in smaller amounts over time, you only pay interest on the money when you withdraw it, and the interest rate is typically the current rate at the time the funds are drawn.

Releasing equity could increase your income enough to make you ineligible for means tested benefits, now or in the future.

Equity release may involve a home reversion plan or a lifetime mortgage, which is secured against your property and the value of your estate will be reduced. This means that there will be less wealth to pass on to loved ones, and funding long-term care will be impacted by releasing the money tied up in your home.  

Equity release can be complex, and it is a long-term financial commitment so it’s important to get the right advice.

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Is equity release a good idea for you?

It’s important to carefully consider the impact of equity release on your individual circumstances when evaluating if it is a good idea for you.

Advice is required before proceeding with equity release and a specialist advisor, such as those at Age Partnership, can talk you through the different options to help you find out if it could be right for your individual needs, or if another option could be better.  

Initial advice is provided for free and without obligation. Only if your case completes would an advice fee of £1,895 be payable. Other lender and solicitor fees may apply.

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Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432. Company registered in England and Wales No. 5265969. VAT registration number 162 9355 92. Registered address, 2200 Century Way, Thorpe Park, Leeds, LS15 8ZB.