In this article
Yes, you can get refused and declined for equity release. In this article, we’ll talk about lifetime mortgages which are the main form of equity release, the other type is a home reversion plan, and these are not readily available.
Can You Be Refused Equity Release?
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Why was I refused for Equity Release?
The Main Reasons Refusals Happen for Equity Release Are:
- Property type not suitable for the lender – there is more emphasis on the property type with equity release than with regular mortgages.
- Loan to value – depending on how much you want to borrow; you may be refused equity release due to your age or the age of your partner if they are younger.
Usually, you will not be refused equity release for:
- Bad credit – credit score is not a big part of the criteria when it comes to lifetime mortgages as the lender has the security with the property and we can usually help. You are unlikely to be refused an equity release mortgage due to having bad credit as there is usually a lot of flexibility with the plans.
- Income – affordability is discussed, however, again, this is not part of the criteria when it comes to being refused equity release as monthly payments are not required but are optional.
The most popular reason why you would be refused for equity release would be that your property type of not suitable for the lender and it doesn’t meet their criteria.
Why was my property refused for Equity Release?
Here are some examples of why a property would be refused equity release:
- Non-standard construction, some lenders are better with this than others with timber framed properties, concrete, prefab etc.
- Damp and rotting timber, here an additional survey may be requested to assess the damage and valuation.
- Clutter, lenders do not like to see hoarded properties and often we see these properties come back with a zero-valuation meaning. This is something to consider ahead of an application.
- Location, if your property is located next to shops or commercial buildings or is deemed in a place that would be difficult to sell.
- Unusual designs, if your property has a quirky design such as stables, part-commercial, internal modifications such as knocked down walls, an annex etc this could result in a declined application.
- Wear and tear, if your property is showing its age and needs a new roof or renovations this will be harder to get accepted for equity release, a term of loan may be included to get the works completed to bring the property up to an acceptable level.
- Restrictions in the deeds of the property, these will be picked up during the legal process.
As always, it’s best to speak your situation and discuss your property type with one of our over 50’s mortgage advisors who can help using their in-depth criteria knowledge and experience.
