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Equity release is a way to unlock the value of your home. If you’re aged 55 or over you can take out cash, tax-free. You can do so without having paid off your existing mortgage, however this must be repaid from the money you release, and you don’t have to move out of your home.The loan is repaid using the proceeds of your home’s sale after you or the last remaining borrower dies or goes into long-term care.
With equity release you don’t need to worry about having to meet monthly repayments. This might be used for something specific, such as planning for your retirement, helping out family members or to make improvements to your home.
You can release equity in one lump sum or in smaller amounts over a period of time (known as drawdown). The amount you’re able to release is based on how old you are and the value of your home.
There are two types of equity release:
If you agree to a lifetime mortgage, you borrow money against the value of your home. It enables you to release a tax-free percentage of equity in the property, with you remaining as the homeowner.
As the name suggest, a lifetime mortgage can last for the rest of your life. Interest rolls up over the life of the mortgage and is added to the amount you have borrowed. This could be a factor if you were planning to leave any inheritance for family members or beneficiaries.
If you decide on a home reversion scheme, you sell all or a part of your home in return for money. You stay in your home, but as a tenant. You can take it as a cash lump sum, regular income or both. When your home is sold, the reversion company receives the proceeds, or a share of proceeds if you sold part of the property.
How much money you can release as equity depends on several factors.
To help decide, a lender will take a look at:
You can receive money raised through equity release as a lump sum or as a drawdown, which is smaller amounts over a period of time.
Equity release plans are repaid when the last borrower dies or enters long-term care. You may repay early but could receive an early repayment charge (ERC).
Equity release may be a great option if you’re 55 or over and looking for a cash injection to fund retirement plans. But you also need to consider the costs involved. This can include:
Some providers offer free valuations, conveyancing and money back towards legal fees.
There are many benefits to equity release, including:
A lifetime mortgage has its advantages and disadvantages, just like any major financial decision. It’s important to understand the features and benefits before you decide if equity release is a good idea for you.
Before you decide whether to release equity on your home, there are additional considerations you should think about.
Products that meet the Equity Release Council’s standards are required to have a No Negative Equity Guarantee. This is an assurance that your estate will never owe more than what the property is worth when it’s sold. When your home is sold, any money left over at the end of your plan goes to you or your beneficiaries in accordance with your will. In the unlikely event your home’s value decreases significantly, it’s possible it may not cover the amount that’s owed. A no negative equity guarantee ensures the rest of the loan would be written off.
In order to release equity, you must be eligible. Common requirements can include:
Find out if you can apply for a Scottish Widows Bank Lifetime Mortgage by using our Lifetime Mortgage Checker.
If you qualify, we will arrange for you to talk to an expert Scottish Widows Bank Later Life Lending Adviser at a time that suits you.
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.
Our equity release mortgages are regulated by the Financial Conduct Authority (FCA) and abide by the standards set by the Equity Release Council (ERC).
Yes, you can move home and take your lifetime mortgage to the new property so long as it meets our lending policy and criteria at that time. If your new property doesn’t meet our lending policy and criteria then your lifetime mortgage comes with Downsizing Protection which means that after 5 years of having your mortgage, you’re able to repay your loan in full without incurring an Early Repayment Charge.
Whether you choose a lifetime mortgage or a home reversion plan, the amount which you can release will be dependent on your age and the value of your home. You can use an equity release calculator, or contact an equity release provider.
It can take around eight weeks for an application for a lifetime mortgage to be completed, and for you to receive the funds. However this could be shorter or longer depending on your circumstances.