MANY homeowners aged 55 and over might find they have a high proportion of their wealth locked in the value of their property.
For those looking to make their lifestyle more comfortable, accessing this value, known as equity release, could help.
But could you access the cash tied up in your home? Read on to find out if you may be eligible for equity release.
What is your equity?
Calculate how much you could access with equity release
Your home’s equity is the difference between the market value of your home and the amount you still owe on your mortgage or any secured loans.
If for example your house is worth £250,000 and you have £40,000 left on your mortgage and no loans secured against your home, you have £210,000 in equity.
When you’ve fully repaid your mortgage or any secured loans, your equity is equal to the value of your house.
The amount of equity in your home is based on the market value of your home then, and not when you purchased it.
Over the past 10 years, average house prices in the UK have increased by 42% according to Nationwide House Price data as of the end of 2024.
This means that the typical house, valued at £189,002 at the end of 2014, has risen to £268,518 at the end of 2024.
So, if you’ve owned your home for several years, the value of your property could have increased, and you may have more equity in your property than you think.
How can I access my home’s equity?
Equity release is just one of the ways you could access the cash tied up in your home, alternatives include remortgaging or downsizing to free up some of your property value.
As advice is required before going ahead with equity release, an advisor will explore alternative options with you to see which is right for your circumstances.
Some people may want to stay in the home they love without making required monthly mortgage repayments, and this is where equity release could be right for the homeowner.
Accessing your home’s equity
Equity release allows you to unlock from a minimum of £10,000 up to 58% of the value of your property.
How much you can unlock depends on the age of the youngest homeowner, if you’re a joint or single applicant, the value of your home and your individual needs.
Finding the right plan for you
There are two main types of equity release plans, a lifetime mortgage and a home reversion plan.
A lifetime mortgage allows you to continue owning 100% of your property.
It is secured against your property, and any money released, plus accrued interest, is repaid upon death or moving into long-term care.
With this type of plan, you’re not required to make any regular repayments if you do not wish to, meaning you could reduce your committed monthly expenses compared to if you had a regular mortgage where monthly payments were required.
Find the right equity release plan for your needs[/caption]
Calculate how much you could access
Another type of equity release is a home reversion plan, which involves selling part of your home to a lender.
You can continue living in your home, typically rent-free, until you die or move into long-term care.
Both types of plans will reduce the value of your estate and impact funding long-term care, which is why it’s good to discuss your decision with your family first.
What should I consider before releasing equity?
It’s essential to carefully consider the features and risks of each option to access the equity in your home before deciding which is most suitable for your needs.
At Age Partnership, a specialist advisor can talk you through the different options to help you find out which option, if any, is best for you.
Initial advice is provided for free and without obligation. Only if your case is completed would an advice fee of £1,895 be payable. Other lender and solicitor fees may apply.
Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432. Company registered in England and Wales No. 5265969. VAT registration number 162 9355 92. Registered address, 2200 Century Way, Thorpe Park, Leeds, LS15 8ZB.
