Equity Release Remortgages

Am I eligible for an equity release mortgage?

If you’re aged over 55 and own your own home, you could apply for an equity release mortgage. However, you should be aware of the requirements you’ll need to fulfil to be eligible.

Your eligibility depends on several factors, including:

• the value of your property
• the amount of equity you hold
• your current financial situation

How does equity release work?

You can release equity in one lump sum, or over several instalments if you’d prefer to receive payment over time. However, you will pay interest on each of the smaller sums.

Before releasing equity from your home, it’s important to receive professional advice from a financial advisor so you fully understand the process and can decide if it’s right for you.

Types of home equity release

There are two different types of equity release for your property - lifetime and home reversion. Each has its own features, benefits and things to be aware of. Read more about equity release.

Lifetime Mortgage

Releasing equity as a lump sum is a form of lifetime mortgage agreement. You’ll usually receive your finances in one go. However, this arrangement also comes with compound interest. This means the outstanding balance can grow larger than it would with other kinds of loan.

You may choose a lump sum equity release, as payments don’t need to be made until the house is sold, although some options may allow you to make repayments rather than let the interest roll up.

Home reversion plan

A home reversion equity release plan allows you to sell either the entirety or a portion of your property at a below market value. The home reversion plan is generally only available to homeowners aged 65 and over.

You can either receive the funds in a lump sum or through regular payments. After the sale, you’ll then be able to live in the house rent-free. At the end of the plan, your property is sold and the sale proceeds are shared according to the remaining proportions of ownership.

Pros and cons of home equity release

As with all types of remortgage, equity release has its benefits and drawbacks, so there are some things to take into account before you apply. For many, it can be an effective way to borrow, but it’s important to consider whether it’s right for you.

Pros of equity release

Benefits of equity release include:

• It can allow homeowners to release funds without having to move home.
• Some plans mean you don’t have to worry about monthly repayments. What you owe is taken from the sale price when your property is sold.
• You and your family shouldn’t ever owe more than the value of your home as most lenders operate what’s called a ‘no negative equity guarantee’.

Cons of equity release

As with any financial decision, it’s important to be aware of the disadvantages before making any commitments. These can include:

• Some plans charge compound interest, meaning the amount you owe rises more than with other loans.
• Remortgaging comes with various fees, so be sure you can cover the cost before applying.
• Once an equity release mortgage is finalised, you’re unable to take out any further loans against the property.
• Repaying the value of the mortgage will reduce the amount of inheritance you can leave to beneficiaries.

Commonly asked questions about equity release

Releasing equity from your home is a big financial decision, so it’s important to be aware of every factor involved. Here are some of the most common queries around equity release.

How much can I borrow?

The amount you can borrow varies depending on your provider and circumstances. Some lenders allow you to release up to 60% of your property’s value.

How long are the repayment terms?

Your repayment terms will depend on the type of deal you agree. Although most don’t feature a monthly repayment plan, some drawdown mortgages allow you to cover the cost of the interest if you wish.

Do I need a valuation?

Yes, you will need to have your property valued during the application process.

Are there any loan fees?

Lenders may charge fees for the application process to cover the costs of setting up the application and any legal requirements. With Norton, our commission comes from the lender once your equity release loan is drawn down.

Applying for home equity release

When it comes to drawing an equity release mortgage, there are a lot of financial aspects to consider. We want to make it easy for you to find out what you need to know.

Once you have decided how much you want to borrow, you can use our online application to apply. We can then put you in touch with one of our specialist providers, who will work with you to decide whether an equity release scheme meets your needs and circumstances.