Equity release explained

Yes, you can sell your house if you have equity release. So long as the new house meets the lender’s eligibility criteria. Moving house may involve you having to settle the existing equity release first and you could be liable for an early repayment charge.

Yes, it’s possible to release equity to buy a second home by unlocking money tied up in your main one. This could be a good idea if your current home has substantially increased in value and the second home is of less value than the amount of equity you want to release. Although, if you do use equity release to buy a second home, you’ll still need to live in your main home for at least six months of the year. There could also be stamp duty to pay so you will need to ask your financial advisor for advice on this.

Yes, it’s possible to release equity on a buy-to-let property without having to sell it. This could be a good idea if you want a tax-free lump sum to spend however you wish. Although, if you do use equity release on a buy-to-let property, you’ll still need to live in your main home for at least six months of the year. There could also be stamp duty to pay so you will need to ask your financial advisor for advice on this.

Yes, you can release equity in your home and use it for home improvements. This is one of the most popular uses for equity release and can actually increase the value of your property as a result.

Yes, you can pay back equity release. Any plan approved by the Equity Release Council allows you to make voluntary repayments, and most lenders will allow you to repay up to 10% of the amount borrowed each year without you incurring any early repayment charges.

Equity release reduces the value of your estate, so when you die the amount of money used from the sale of your property to repay the equity release is deducted from the value of your estate and is not subject to inheritance tax.

Yes, equity release can be used to pay off your mortgage and other debts. You will be required to pay off any debts secured against your home before you can release equity. It might be helpful if you use our free equity release calculator to get an estimate of how much could release first.

When you die your beneficiaries usually have up to 12 months to repay your equity release debt. This will normally involve the executor of your estate selling your property and using the proceeds to settle the equity release plan. Although your beneficiaries may be able to use other sources of finance to settle the debt if they wish to keep the property. They would need to discuss this option directly with the lender.

Yes, you can get equity release on a leasehold property whether it is a house or a flat. That is provided you meet the eligibility criteria set out by the lender. These may include the time remaining on your lease, if you pay any ground rent, any service charges payable, and also your building insurance.

No, once you have taken out equity release on your home you are unable to rent it out. However, you can have a lodger. This is because there is a legal difference between a lodger and a tenant. Tenants have certain rights to protect them which makes equity release difficult, whereas lodgers share your home with you.

Everyone’s favourite money guru Martin Lewis from Money Saving Expert obviously has an opinion on equity release. He believes that equity release is risky but can be a good idea if you have considered other options first such as downsizing, you are not concerned with the value of your estate after you die and you are aware that releasing equity can affect your eligibility for benefits. Martin Lewis has also said that if you do decide to proceed with equity release then you should not borrow more than what you need, make sure the provider is a member of the Equity Release Council. You can read Martin Lewis’ full thoughts on equity release here.