Equity release products are popular with UK homeowners as an easy way of getting their hands on a tax-free cash lump-sum. Find out more about how we can help you make the most of your estate with affordable and flexible equity release plans.
Equity Release Mortgages Available For
- All residential properties that you fully own
- All residential properties in which you hold joint ownership
Equity release mortgages are designed to help homeowners release the equity from a property they already own. This is a popular way of converting one’s partial/full stake in a property into liquid cash, without any sort of hassle.
Commercial Finance Network, a fully independent and leading whole of market broker in the UK, helps you get equity release quotes from UK-wide specialist lenders who are willing to offer better-than-market deals, coupled with fair property valuations and easy, straightforward repayment clauses (if any).
What Does “Equity Release Mean”?
Equity release is an interesting concept. For all practical purposes, it’s similar to other mortgage products – it lets the borrower raise money by putting up their asset (the property, in this case) as collateral/security. The borrower has the option of releasing full/partial equity as per their requirements. The cash generated via equity release is tax-free, and can be utilised the way you want to.
The key difference lies in how equity release mortgages are structured and paid back, and who is eligible to get them.
Equity Release Eligibility
The most important eligibility criterion for equity release mortgages is the age of the borrower. Presently, equity release products are available to borrowers aged 55-95 (the age range that corresponds to near retirement/post retirement).
Some lenders may have in place their own criteria that revolve around the market value of the property, borrower’s medical history/overall health and the existing mortgages on the property. This brings us to a relevant question: what exactly is your equity in your home?
How Much Is Your Equity?
Your equity in your home is the share of its value that you actually own. The easiest way to calculate your equity is getting your home valuated from an expert and deducting all existing mortgages from that number. Once you know what your equity is, you’ll also know what percentage of it you want released.
What Is Equity Release Mortgage Term? Who Pays It Back, And How?
These are among the most common questions we get asked.
It’s important to understand that releasing equity only means that you collateralise a portion of your property. There is no mortgage term to speak of – the repayment takes place only when the equity release plan expires (by selling off the property). This typically happens when the homeowner passes away (or has to leave for long-term care).
Equity release mortgages, in most cases, do not require you to make monthly repayments. A handful of lenders may allow you to make monthly interest repayments without any additional early-repayment charges.
Types Of Equity Release Mortgages
There exist two major equity release types.
A lifetime mortgage is the simplest (and the most popular) form of equity release.
It’s a straightforward secured loan taken against the market value of the property, with a fixed/tracker interest rate as decided by the lender. The mortgage amount and the applicable interest are paid back when the equity release plan ends, and the borrower usually has to make no monthly repayments to the lender.
Here’s why a lifetime mortgage can be a good way of releasing equity:
- It’s an extremely flexible mode of equity release. You, as the borrower, are firmly in charge of structuring the mortgage as per your exact requirements.
- You can choose to convert your equity into a lumpsum, tax-free amount paid to you in one go, or turn it into a monthly income stream (as you prefer).
- You retain the ownership of your home. Therefore, despite encashing your equity, you don’t have to move.
Home reversion is a modified equity release product. When you release your equity in your home to the lender (usually a specialist reversion company), you lose the ownership of the home. However, the lender allows you to live rent-free in ‘your’ home as long as the equity release plan is active. Home reversion will almost always yield lower-than-market value on your property.
Unlike lifetime mortgages, home reversion plans are rigid. You are required to give up your entire equity in the property, and the repayments will be deducted from the sale proceeds by the lender when the equity release plan expires. Moreover, home reversion plans are typically reserved for borrowers older than 65 years of age.
Here are some important features of home reversion plans:
- You can get your hands on a tax-free lumpsum.
- It’s usually cheaper and faster than selling your home off and then renting another.
Things To Consider Before You Release Your Equity
At Commercial Finance Network, we only work with responsible, experienced lenders. This allows us to safeguard your financial interests. That said, it’s still important for you to consider 3 points before you release your equity:
- You should always retain the right to live in your home rent-free as long as the plan is active. It’s even better if the lender agrees to fund your move into another property, should you wish to.
- It’s advisable to enforce a no negative equity clause in the equity release agreement. This will ensure that you’ll never owe the lender more than the market value of the property.
- In certain cases, it’s advisable to include an inheritance protection clause that will make sure that your loved ones can benefit from the lifetime of hard work you’ve put in.
Advantages Of Equity Release
- You can convert your equity into tax-free cash with ease.
- A lumpsum (or drawdown) package ensures that you’re able to lead a comfortable lifestyle, while funding your other interests like travel and entertainment.
- You can also use this cash to settle other debts and pay your ongoing bills.
- The owed amount will always be capped at the property value.
- If the property value increases over time, you can benefit from the upward surge.
Disadvantages Of Equity Release
- Home reversion plans strip you of the ownership of the property, while lifetime mortgages put you under a debt that lasts your lifetime.
- Releasing the equity means that you never fully realise the potential of the investment you’ve made in your home years ago.
How To Apply For An Equity Release Plan?
Applying for an equity release plan is easy:
- Step 1: Complete this short online form to give us your basic details and we’ll call you back. You can also call us on 03303 112 646 to get started.
- Step 2: Our Equity Release Specialists will search the best details for you across the whole of market and then report back with a personalised proposal for you.
- Step 3: If you wish to proceed, we can then provide a Decision in Principle for you within 24 hours, so you have peace of mind before submitting a full application.
Why Commercial Finance Network?
Releasing equity from your home is an extremely important decision that will directly impact your life after retirement. So, it makes all the sense in the world to go about it the right way – and that’s exactly why having an experienced broker like Commercial Finance Network on your side is vital.
“At Commercial Finance Network, we understand how important it is for you to get the best possible equity release quote that does justice to the years of hard work you’ve invested in buying and developing your home.”
Here are a few reasons why our equity release broking services are popular among homeowners:
- We have an exemplary track record and experience of building fully customised finance products for our customers.
- Our panel of lenders features specialist home reversion companies and private lenders across the UK who will treat your application fairly.
- We have consistently brokered equity release plans with high loan values and lower interest rates, along with added frills like no negative equity and inheritance protection.
- Our unique “WiiN” customer portal allows you to track the progress of your application, every step of the way, whilst also being notified instantly via email of all updates.
Cheap, Flexible And Fast Equity Release Plans Are Now A Reality!
Your local finance broker can only offer you so much. High interest rates and rigid plans mean that you end up slashing the price of your property down considerably. This, of course, is never a good idea.
You can avoid going down that route by letting us look after your equity release requirements.
Make the most of your retirement years with an equity release plan that makes sense and gives you ample financial freedom.
Our Equity Release Mortgage Reviews
Top notch communication from start to end. I had never dealt with private lenders before, but Charlotte and other members @ team CFN broke down the finer points for me.