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Equity Release

We’ll explain what equity release is and how it works, outline the considerations and answer frequently asked questions so you can decide if it could be right for you.

What is equity release?

Equity release is a way of releasing some of the value from your home so you can enjoy tax-free cash for other things. You need to be 55 or over but don’t need to have paid off your existing mortgage and can stay in your home.

Equity release enables you to access some of the value in your home without worrying about monthly repayments. You could use the money to pay off debts, make home improvements, help a family member to buy their first home or go on holiday.

If you decide to release equity, you can do so:

  • In one lump sum.
  • A lump sum as well as smaller amounts over a period of time (this is known as drawdown).

The amount you can release from your property is based on your age and how much your home is worth.

To estimate how much equity is in your home, you can look at local house prices for properties like your own. A lifetime mortgage from Scottish Widows Bank includes a free property valuation.

How does equity release work?

If you opt for equity release you can take out what’s called a lifetime mortgage, which is a mortgage secured on your home. 

You may choose to make payments during the mortgage to reduce the interest being added or as a final sum at the end. Bear in mind that this could impact any inheritance you leave for your loved ones as the equity in your property will be reduced over time.

A lifetime mortgage is usually repaid when the property is sold. This is usually when the last surviving borrower dies or moves into a care home.

If you have an existing mortgage on your property, this must be repaid using the proceeds of the new Lifetime Mortgage.

Here’s an example of how a lifetime mortgage can work:

Mr and Mrs Harrison are in their 60s, soon to retire, and live in a home valued at £150,000. They have paid off their mortgage and have no debt left to pay on their house. If both customers were 65, they could take a Loan to Value of 36% - £54,000 - to go towards holidays and a new conservatory.

Things to consider based on your individual circumstances

It's important to understand the types of things you need to consider before releasing equity from your home.

  • You can take a cash lump sum, or a lump sum and then smaller amounts over time.
  • You'll continue to own your home until the mortgage needs to be repaid upon death or long-term care of the last surviving borrower. 
  • You can set aside some of your home’s value to be passed on as inheritance however this may be reduced if you take a lifetime mortgage.  
  • No monthly payment is needed but interest will continue be added to the amount owed. 
  • You'll have the right to move to another property (subject to lending policy and criteria at the time) without having to pay any early repayment charges. 
  • You'll be protected by the ‘No Negative Equity Guarantee’ meaning your estate won’t have to repay more than what your home sells for even if you owe more.
  • Your entitlement to means-tested benefits may be affected if you take out a lifetime mortgage.
  • You can make some overpayments over the life of the mortgage without penalty but, early repayment charges may be payable if you want to repay more or repay the mortgage in full. These do not apply on death or moving into long-term care.

Am I eligible?

This is all possible with a Scottish Widows Lifetime Mortgage, but to be eligible:

  • applicants must be aged between 55-85
  • applying for a single or joint application (maximum age limit only applies to younger applicant)
  • the lifetime mortgage must be on your main residence
  • the property is in England, Scotland or Wales
  • applicants already own the property
  • want to borrow at least £30,000.

If you tick all these boxes, use our Lifetime Mortgage Checker to see if you can apply.

How can Halifax help?

If you think a lifetime mortgage might be right for you and would like to discuss it with someone, Halifax can put you in touch with Scottish Widows Bank, a division of Lloyds Bank plc, who offer a lifetime mortgage. They can explain your options and risks and understand your needs and circumstances to decide if a lifetime mortgage would be right for you.

Scottish Widows Bank is proud to be a member of the Equity Release Council (ERC) and abides by its standards. The ERC was established 30 years ago and is the industry body for the UK equity release market.

This means you'll benefit from specialist mortgage advice, with our expert Later Life Lending Advisers, who will discuss your own individual needs and circumstances, to understand if a lifetime mortgage might be right for you.

What next?

Find out if you can apply for a Scottish Widows Bank Lifetime Mortgage by using our Lifetime Mortgage Checker.
 

Lifetime Mortgage Checker


Or, you can call us on 0345 122 1607. Our lines are open Monday to Friday 8am – 8pm, Saturday 9am – 4pm. We’re closed on Sundays and Bank Holidays.

If you qualify, we'll arrange for you to talk to an expert Scottish Widows Bank Later Life Lending Adviser at a time that suits you.
 

Want to know more?

Join our experts to learn everything you need to know about releasing equity from your home. They'll cover what equity release is and how it works, outlining considerations and giving you the chance to ask any questions you have.
 

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FAQ's

  • The amount you release will be based on your age and property value. To find out how much equity you might be able to release, talk to a Scottish Widows Bank Later Life Lending Adviser who will assess your individual needs and circumstances and talk through your options.

  • If you take out a lifetime mortgage, there are upfront costs to factor in, just as with a normal mortgage. Your adviser or lender will discuss what fees may be applicable. However, with a Scottish Widows Lifetime Mortgage you receive; 

    • free advice with from a Scottish Widows Lifetime mortgage adviser
    • free conveyancing
    • a free property valuation
    • £600 cashback towards independent legal fees

  • Our lifetime mortgage interest rates are based on your individual circumstances such as your age and property value and how much cash you would like to release. Interest is charged on the total borrowing, which increases the amount you owe (which is known as compound interest). Our expert mortgage advisers will explain how interest is calculated and arrange a personalised illustration, which will show you your interest rate.

  • It normally takes around eight weeks from application to when you receive your funds. However this could be longer or shorter depending on your circumstances.