Equity Release | How Does Equity Release Work?

What is Equity Release?

Equity release is a generic term referring to a range of products which allows clients aged 55 and over to access the equity in their property without having to move home. The money released can be a one-off lump sum, a number of smaller amounts or a combination of the two.

There are two equity release plans and both are regulated by the Financial Conduct Authority (FCA).

How to Release Equity through a Mortgage

A loan is granted secured on the property which is usually your main residence. The majority of lifetime mortgages permit the interest which is being charged to be “rolled up” and so added to the loan which will increase the debt. The loan amount and any accrued interest are paid back when the property is sold, usually upon death or when the borrower moves into long-term care. Where a property is owned jointly the arrangement will remain in place until the death of the second borrower or until the second borrower goes into long-term care. Learn more about Lifetime Mortgages here.
How do you get the Equity from your home?

A home reversion is the sale of all or part of your home to a home reversion company in return for a lump sum or regular payments. As with the lifetime mortgage, customers can continue to live in their property, rent-free, until they die or until they leave the property to go into care. Learn more about Home Reversion here.

Equity Release Advice

If you wish to arrange either a lifetime mortgage or a home reversion you must take advice from a financial advisor who has passed an appropriate examination and who holds a specialist qualification. In addition, it makes sense to use an advisor who is a member of the Equity Release Council, a trade body representing those involved in the equity release market. Members have agreed to abide by a set of rules and standards which go beyond the basic regulatory requirements.

Michael Forward Financial Services Ltd is a member of the Equity Release Council and is authorised and regulated by the Financial Conduct Authority. FCA No: 630157

Equity release may involve a lifetime mortgage or a home reversion plan. To understand the features and risks, obtain a personalised illustration from a professionally qualified advisor. A lifetime mortgage is a loan secured on your property.
Is Releasing Equity the Right Option for Me?

Good question. Whether equity release is the right option for you depends on many circumstances, including:
- Age
- Income
- Future plans
- How much money do you wish to release?
When you decide to release your equity, it can be tempting to focus on the immediate boost instead of the long run. However, it’s important to consider your future choices as well, this can help to improve your financial situation in later life.

If you have any questions or queries, please get in touch on 01604 635435 or fill in our contact form over on our contact page. We cannot wait to hear from you.