What is Equity Release?

Equity Release is the generic term for releasing equity from your home via either a Lifetime Mortgage or a Home Reversion Scheme.

The most popular way for people to release equity from their home is through Lifetime Mortgages, which can be done in two ways; via a lump sum or drawdown of capital and/or income over time.

Lump sum

This option provides you with a tax-free lump sum for you to use as you wish. The capital made available is a debt, secured on your home. You don’t have to make any monthly repayments of capital or interest. However, interest is charged and added to the outstanding debt which is repaid when you die, sell the home or go into long-term care.

Drawdown

This is a more flexible option, allowing you to draw money down as you need it up to an agreed limit. It is often used by people who don’t need a lump sum, or who need to supplement their income. Again, you don’t have to make any monthly payments, with interest being added to the amount you owe and debt repaid when you die or sell the home.

While timings can vary, the process from making an initial enquiry to having access to funds typically takes between one and three months to complete.

The amount you can borrow depends on things such as your age and the value of your property. And you should remember that a Lifetime Mortgage will always reduce the inheritance you can leave and may affect your tax position and eligibility to some welfare benefits.

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