Am I eligible for equity release?

Can I release equity from my house?

Equity release can help you fund your retirement plans by unlocking a portion of the value of your home and turning it into cash. You can choose whether to receive that money as a single tax-free lump sum or small amounts over time. Equity release comes in the form of either a home reversion plan or, more commonly, a lifetime mortgage.

There are a number of factors that determine equity release eligibility, such as applicant age and the value of the property.  Releasing equity from your home is a big financial decision that may affect your future plans and your legacy if you intend to leave anything to beneficiaries so be sure you’ve explored all the options. Unless you own a large proportion of your home and have been repaying your mortgage for a long time, there may be no real benefit to taking out an equity release loan.

Start by using our eligibility checker to find out if you qualify for one of the Scottish Widows Bank Lifetime Mortgage.

What are the eligibility requirements for equity release?

There are a number of factors that lenders look at when deciding whether you are eligible for equity release. These usually include:

  • Age - There will be a minimum and maximum age that you will need to meet
  • Property Value - Your home will need to meet a minimum value
  • Applicants - Maximum number of applicants is usually 2
  • Ownership - You own your property and it is your main residence
  • Location - Your home is located in England, Scotland or Wales is most commonly accepted. A small number of lenders will lend in Northern Ireland and other isles.
  • Property Construction - If your home is of ‘standard construction’ i.e. bricks or stones, pitched tile roof however other construction types can be acceptable to some lenders
  • Property Condition - Your home must be in good condition and a valuation will need to take place to confirm this.

Benefits of releasing equity from your home

Taking out equity on your home can provide a financial boost to retirement plans. If you’re searching for funds to buy another property or help a family member to get on the property ladder, you might want to look into it more seriously

Access to your money also comes with some flexibility over when and how much you choose to get. Receive a single tax-free lump sum, or choose to take smaller amounts over time.

Releasing equity from your home may limit what you can pass on to your family or beneficiaries when the loan is eventually repaid. However, you may be able to ring-fence a portion of your property’s value so that loved ones can still benefit when you pass away, and you don’t even have to move out of your home.

You’ll also benefit if your property increases in value – it’s more money which can be passed on after your death, or even borrowed against with another release of equity. And you won’t have to pay back any more than the value of the property once it’s sold, as lenders who are members of the Equity Release Council operate a no negative equity guarantee. The Equity Release Council (ERC) are a formal organisation that represents all equity release lenders.

Potential drawbacks of equity release

If you’re wondering if a lifetime mortgage could help you, it’s important to consider the advantages and disadvantages. Some examples of these are detailed below but your adviser will always discuss your needs and circumstances to decide if it is right for you.

  • You can take a cash lump sum, or a lump sum and then smaller amounts over time.
  • You will continue to own your home until the mortgage needs to 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 required but interest will continue be added to the amount owed. 
  • You will have the right to move to an alternative  property (subject to lending policy and criteria at the time) without having to pay any early repayment charges. 
  • You will 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.
  • Taking out a lifetime mortgage could affect your entitlement for means-tested benefits.
  • 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.

Equity release FAQs

  • Equity release is not based on income. Lenders consider the amount of equity you have in your home, as well as other criteria including your age and the value of your property.

  • The amount of money which you can take out of your property will depend on your age and the value of your property. The percentage you’re eligible to borrow increases as you get older. You don’t have to borrow the full amount that’s available, and you can choose between a single lump sum or smaller amounts over time.

  • Yes, it may be possible to make repayments towards your equity release. You can also repay it in full in one go if your circumstances change. Be aware however that this may incur an early repayment charge.

  • Yes, it’s possible to ‘port’ your equity release to another property if you decide to sell up and move. You would need to contact your lender before moving as they’ll need to assess whether the new property meets their lending criteria.

  • Equity release lenders who are members of the Equity Release Council must offer a no-negative equity guarantee to borrowers. It means if the amount you owe when you die or move into long-term care exceeds the value of the house when sold, lenders will not try to recover more than the proceeds of the sale.