16 December 2021

Equity release explained

6 min read

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What is equity release? How does it work? How much can I release? While equity release can appear complicated at first, for many over-55 homeowners it could be the solution they need.

What is equity release?

Equity Release allows over 55s to either purchase a property or release the equity in their current property. 

What is a Lifetime Mortgage?

A Lifetime Mortgage is the most popular type of equity release product. With it, over-55 homeowners can purchase a property or release equity from their current property without the requirement to make monthly payments.

How much can I release?

The amount of equity you can release is primarily determined by your age and the value of your home. Use the equity release calculator to receive your estimate.

How is equity release repaid?

If you release equity with a Lifetime Mortgage, the amount borrowed plus accrued interest is repaid once the last homeowner has either died or entered permanent long-term care. This is usually achieved with the sale of the home.

What is the impact of equity release?

Releasing equity from your home will reduce the value of your estate. If you are in receipt of means-tested benefits, then releasing a tax-free sum could affect your entitlement to them.

What is a home reversion plan?

A home reversion plan is another type of equity release product that involves selling all or part of your home. The reversion provider will then allow you to remain living there, rent-free. However, you will receive far less than market price for your home.

How is a home reversion plan repaid?

A home reversion plan involves selling part of your home, so there is nothing to repay monthly. Instead, the provider will take their percentage of the property’s value once it is sold. For example, if you sold 25% of your home then the provider would take 25% of the sale price.

Can you release equity with an existing mortgage?

Yes, you can release equity with an existing mortgage. You just need to ensure that the outstanding balance is paid off at the point that the equity release completes, either with the funds released or other savings you may have access to. Many use their tax-free cash to clear their existing mortgage.

What is the Later Life Lending Service?

The Royal London Later Life Lending Service is provided by specialist Responsible Life. We chose Responsible Life as the providers of our service as they are passionate about finding over-55 homeowners the best products available to them and their customer centric approach aligns with our values. Through this service, we can offer you access to a range of products, including:

How do you apply for equity release?

To apply for equity release you must first speak with a fully qualified adviser. We can provide access to an adviser through Responsible Life. We’re confident that consumers will receive high quality advice on later life products from Responsible Life.

Find out more about applying for equity release.

If you choose a mortgage with required repayments during your lifetime then your home may be repossessed if you do not keep up with the payments. Equity Release will impact the value of your estate and could affect your entitlement to means-tested benefits.

Got a question? The Responsible Life team are here to help

0800 023 9311

Free from UK landlines and mobiles

Mon to Fri: 9am-8pm. Sat: 9am-5pm.

Royal London have chosen Responsible Life to provide our customers with advice on Later Life Lending products. The Royal London Mutual Insurance Society Limited has a 30% shareholding in Responsible Life and Responsible Lending (Responsible Group) and are part of the same group under FCA disclosure rules.

Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/) under reference 610205.

If you choose a mortgage with required repayments during your lifetime then your home may be repossessed if you do not keep up with the payments. A Lifetime Mortgage will impact the value of your estate and could affect your entitlement to means-tested benefits. Think carefully before securing other debts against your home.

To understand the features and risks, ask for a Personalised Illustration. Responsible Life’s adviser will talk through the setting up costs of a mortgage before you make any decision to proceed. Only if you choose to proceed and your case completes will Responsible Life charge an advice fee, currently not exceeding £1,690.

If you take out a product recommended by Responsible Life, Royal London Marketing Limited will receive a fee, for this introduction. If you would like further details about this fee, Responsible Life will be able to provide you with this. More information about Responsible Life and how your information is processed is available on their privacy notice. Find out how Royal London manages your personal data.

Royal London Marketing Limited is authorised and regulated by the Financial Conduct Authority, registration number 302391. Registered in England and Wales number 4414137.

Responsible Life's registered office is: Mills Bakery, Royal William Yard, Plymouth, PL1 3GE. Registered in England & Wales. Company number 7162252.