Downsizing
Moving to a smaller or less expensive home can free up money without any borrowing. Remember to allow for the costs of moving.
The idea in short
Equity release lets homeowners aged 55 and over unlock some of the value tied up in their home without having to move out. The "equity" is the part of your home that you own outright: what it's worth, less any mortgage.
You can take the money as a lump sum, in smaller amounts when you need it, or in some cases as regular income. The most common way to do this is a lifetime mortgage, which is a loan secured against your home. It's the only type of equity release I advise on, so it's the focus of this guide.
It can suit some people well, but it's a long-term commitment with real costs, so it's worth taking your time.
Who it's for
Who can release equity?
- 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.
- Your home is worth enough. Lenders set a minimum property value.
- Any existing mortgage can normally be repaid from the money you release.
How much could you release?
It depends mainly on your age and the value of your home. In general, the older you are, the more a lender may offer. Some lenders offer more if you have certain health or lifestyle conditions.
Our calculator gives you a rough idea in a minute. It's an estimate only, and your actual offer depends on the lender and your circumstances.
Step by step
What happens, from first chat to funds
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A first conversation
A free, no-obligation chat about your home, your finances, what you'd like the money for, and how your family feel about it. You're welcome to bring someone along.
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Looking at your options
We consider whether equity release fits your situation, alongside the alternatives. I explain the costs and risks of each option so you can compare them fairly.
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A recommendation and illustration
If equity release makes sense, you receive a personal recommendation in writing, with a personalised illustration showing the costs and how the loan could grow. You then have time to read it and think.
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Independent legal advice
You'll need to see a solicitor, independent of the lender, before going ahead. Equity Release Council standards require it. It's a safeguard to make sure you understand exactly what you're agreeing to.
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Application, valuation and offer
The lender values your home, checks the details and, if everything is in order, issues a formal offer. This usually takes a few weeks, depending on the lender and the solicitors.
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Completion
Once everything is signed, the money is released to you, or to repay your existing mortgage first, with the rest going to you.
Talk to your family. Equity release affects what's left for your family, so it usually helps to include them early. Many people find it helps to have them in the room, or on the call, for the first conversation.
What happens later on?
With a lifetime mortgage, you carry on living in your home. The loan and any interest that has built up are usually repaid when the last borrower dies or moves into long-term care, normally by selling the home. Anything left after that goes to your estate.
You'll be expected to keep the property in good repair and insured while the plan is running.
What does it cost?
Costs vary between plans, so ask for the full picture in writing. They can 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.
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.
- It can be costly to undo. Plans are designed to be long term, and early repayment charges can be high.
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
Other routes
Alternatives to consider first
Sometimes the right answer is not to release equity at all. These are worth thinking about, and I'll always talk them through with you.
Retirement interest-only mortgage
You pay the interest each month and the loan is repaid when you die or move into care. It needs to be affordable, and it isn't right for everyone.
Other borrowing
A standard mortgage or loan may be cheaper if you can comfortably afford the monthly repayments. Lenders may limit borrowing by age.
Help from family
Some families are able to help. If so, it's wise to agree the terms clearly and write them down.
Benefits and support
Check you're receiving 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 may have savings or pension options to use instead. Free, government-backed guidance such as Pension Wise is available for many over-50s.
Want to talk it through?
There's no obligation and no pressure. Have a go with the calculator, or get in touch for a friendly chat.