Are You Eligible for Equity Release? Here’s How to Fund Your Home Improvement


Are you over 55, cash strapped, but property rich?

Is there a home improvement you’ve wanted to do but haven’t worked out how to fund it?

Well, by now, you’ve probably heard about the incredible financial product that is – equity release.

Interior by AGK Design Studio. Photography by Ryan Garvin

However, despite the product’s popularity and fantastic features, it isn’t as straightforward as it seems and thus you need to dig deep into research and get to know the ins and outs of this.

Lucky for you though, this comprehensive guide will provide you with an unbiased, insider review to what equity release entails and if you’re eligible for it.

Be sure also to check out these guys and to  see how much equity you can release with the equity release calculator.

What is Equity Release?

Equity release, in a nutshell, is a simple way for you to acquire some of the cash tied up in the value of your estate.

This is one of the easiest ways to fund that dream home improvement.

Interior by AGK Design Studio. Photography by Ryan Garvin

There are two main ways to go by it. You can either choose to take out a mortgage secured against your home or sell a part or all of your residence.

With either scheme, you have the right to reside in your space until you breathe your last breath or opt to move into permanent care.

Based on the scheme you select, you can release the tax-free sum either as a lump sum or as drawdowns, and it’s up to you to decide how to spend it.

Types of Equity Release Plans

There are two forms of equity release schemes. There’s the:

#01 Lifetime Mortgages

The plan is tailored to run for your lifetime, in which your home remains 100% in your name, and it doesn’t need you to make any monthly payments.

Moreover, you get to repay the loan plus interest when the plan provider puts up your residence for sale, which is typically when you pass on or go into long-term care. You can read more on this plan here.

Interior by AGK Design Studio. Photography by Ryan Garvin

#02.Home Reversion Plans

It is targeted to homeowners in the UK aged 65+.

Unlike the lifetime mortgage, the home reversion plan involves the lender buying a portion (or all) of your estate (at less than market value) and in return gives you a tax-free equity lump sum.

The provider then offers you a lifetime tenancy that enables you to live rent-free in your residence until you pass away or move into permanent care. You can read more on this plan here

Do You Qualify?

Here are some of the requirements of any equity release plan:

#01.The Property’s Market Value

As per the stipulated commendations, the minimum estate value of your residence should be at least £70,000.

Hypothetically, there is no upper limit, but, some lenders set their maximum values to about £6million to safeguard themselves from risks.

#02.Your Age

Presently, according to FCA and ERC, the youngest age at which a proprietor can take out an equity release plan is 55. Nonetheless, some equity release companies require you to be at least 60 years of age.

The age of the youngest property owner forms the basis of the equity release calculation. It governs how much capital you can unlock.

Interior by AGK Design Studio. Photography by Ryan Garvin

#03. The Amount You Can Unlock

Dependent on the company you choose, the minimum amount you can release is usually £10,000. Nevertheless, some lenders can set it at £15,000, or even £100,000 on more high-status plans.

The maximum amount you can borrow is reliant on the age of the youngest homeowner, their medical status, and, of course, the estate’s value.

Moreover, the older you or your spouse is, the higher the amount you can unlock from your property.

#04.Your Estate’s Location

For you to qualify for equity release, your property needs to be in the UK.

You also need to note that some lenders can decide to impose localised rulings as to whether they can take account some of the extremes of the UK in their remit.

Interior by AGK Design Studio. Photography by Ryan Garvin

As a case point, Northern Ireland is currently restricted to two plan providers.

Most equity release companies, however, insist that your manor must be situated on the mainland, thus ruling out specific islands.

So, before you make any final decisions, ensure that you check with your professional adviser and get to know if your manor’s locality is a potential problem.

Equity release schemes were designed with you in mind. They were meant for anyone looking to kick out any financial issues after retirement. Who says retirement can’t be fun? Thanks to Sovereign Boss for collaborating!

It’s time to get that dream home improvement started!


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