The pros and cons of equity release

Equity release can turn your home into a source of retirement income, but it has big implications.

Is a lifetime mortgage right for you?

Lifetime mortgages, the most popular form of equity release, help you release equity in the form of a lump sum or a series of flexible payments. This equity is released in the form of a loan against your property, which is usually only repaid when you die or enter long term care.

Could a lifetime mortgage be right for you? What are the pros and cons?

Pros

A lifetime mortgage allows you to release equity from your home in the form of a cash lump sum or a series of flexible payments while retaining full ownership.

A lifetime mortgage allows you to release equity from your home in the form of a cash lump sum or a series of flexible payments while retaining full ownership.

See how much cash you could potentially get with our equity release calculator.

Lifetime mortgages with a No Negative Equity guarantee that you never owe more than your home is worth.

You can stay in your home for life.

You don’t have to make any repayments until you die or enter long term care, but there are options to make payments against the interest and the loan.

Unlike a home reversion plan, where you sell a portion of your home up-front, with a lifetime mortgage you retain ownership and can fully benefit from future increases in the value of your property.

You can choose to pay off the loan early.

Equity release can reduce the value of your estate, which can be useful in reducing your Inheritance Tax liability.

Find out how much equity you could release with our equity release calculator.

Cons

The interest on a lifetime mortgage can ‘roll-up’, which means with a rate of 5.5% compounded annually on a £100,000 lump sum would add interest costs of £71,000 over ten years.

Lifetime mortgages typically come with lender fees, solicitor fees and a fee paid to the equity release adviser who recommends the product. Charges associated with equity release can total between £2,000 and £3,000.

An adviser will help you understand all the charges associated with any product they recommend. Find out more about the costs of equity release.

If you choose to repay all or part of the loan early there may be an Early Repayment Charge.

The money you release from your home with a lifetime mortgage can affect your entitlement to means-tested state benefits.

Whether a lifetime mortgage is right for you depends on your individual circumstances. A specialist adviser can help evaluate if it is the right route for you.

Find out if a lifetime mortgage is right for you

Get a free initial consultation with OneFamily Advice.

We charge a simple fixed fee of £950 for our whole-of-market advice, only payable if you accept the recommendation of one of our advisers.

Find out more

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Try our equity release calculator

Find out how much equity you could release by entering your details below.

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Maximum loan amount:

Important: The loan amounts above are an illustration of the amount you could borrow. The actual amount may vary depending on your individual circumstances. The figures are not guaranteed and do not constitute an offer to lend. The loan amount will need to pay off any existing mortgage secured against the same property.