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Ways to Release Equity From Your Home

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Equity is the difference between the value of your property and the balance of your mortgage. Every single homeowner will have at least some level of equity sitting in their home.

No matter if you’re looking to remortgage to release equity or meet the criteria for a later life mortgage and equity release, you will have that same equity to play with. That element remains the same, it’s the path you choose to take that differs for homeowners.

Remortgage to Release Equity

This is a common occurrence for younger homeowners who are reaching the end of their fixed-term or introductory period. When your deal ends, you’ll generally fall onto your mortgage lenders Standard Variable Rate, which can be costly.

Instead of this, many homeowners will seek remortgage advice, to put themselves on a better rate or even perhaps for another purpose, such as taking out a remortgage to release equity.

Doing so will not only have you on a much more suitable deal than the mortgage lenders SVR, but will give you the equity that is sitting within your home, to work with as you please.

We would recommend remortgaging around 6 months before your current deal is due to end, to get the process underway ahead of time. Typically, we find this is enough time to get the process finalised about the same time your deal is ending.

If you previously used our services, a member of our mortgage advice team will be in touch with you around this time period to discuss your remortgage options with you and look at what you are planning for your future.

Whilst 6 months is what we would recommend, there are instances where a homeowner may wish to remortgage early. Take a look at our article “Can You Remortgage Early?” to learn more about this.

Equity Release & Later Life Mortgages

Equity release works differently to a regular remortgage in many ways. The biggest difference being you don’t have to have a mortgage on your home to qualify for it. You might have paid your mortgage off years ago, and can still achieve equity release.

In order to qualify, you will have to be over the age of 55 and have a property that is worth £70,000. Even then, equity release may not be right for you, which is where a later life mortgage advisor will come in. They’ll run through what you’re looking to achieve and suggest the best option for you at this stage.

Equity release comes in two forms, lifetime mortgage and home reversion plan. As a mortgage broker, we are able to help with both of these types of mortgages.

What makes a remortgage to release equity different from equity release?

The difference between the two is that a remortgage to release equity means that you’ll be taking out another mortgage on your home, with another fixed-period of your choosing. At the end of that period you can either remortgage again or sell up and move home.

With a lifetime mortgage, your term will be extended over the rest of your life. You are able to withdraw that equity to use as you please, with the balance being paid back upon either your death or if you were to move into long term care.

Over the years lifetime mortgages have become more flexible and may allow for you to move home still, but this varies from case to case and depends on a variety of factors. If this is something you are looking to do, please speak with a qualified later life mortgage advisor.

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Why might someone look to release equity from their home?

As for why people may look to release the equity that is in there home, there are a lot of reasons why a homeowner may look to either remortgage or take out a lifetime mortgage.

Though some reasons are more common with one route than the other, most can be interchangeable to some degree and we have seen them apply to both instances.

Home Improvements

One of the more common reasons we see for homeowners looking to remortgage is to make home improvements.

For younger homeowners, they perhaps don’t want to move out of the home they’ve grown attached to and love. Instead, they may want to make alterations or upgrades that better suit their current lifestyle.

From new kitchens, to extensions, home offices and loft to bedroom conversions, we hear of all kinds of changes planned to be made on customers homes.

When applying to later life customers, whilst the above may also be just as valid, there may be changes more akin to making arrangements for mobility needs and other necessities.

Consolidate Debts

Another one we see frequently, is customers who have perhaps accrued any unsecured debts over time and have found their monthly finances to become unmanageable.

Generally, they will look to take out a debt consolidation mortgage, so they can secure these into one more manageable monthly payment against their home. You’ll likely be paying more back on interest over the duration of your term, but your monthly amount will hopefully be much easier for you.

When applying this to equity release, we find that later life applicants who perhaps have had their debts catching up to them, will use some of their released equity to simply pay off these debts.

To Buy Another Property

Homeowners who are looking to supplement their income may look to remortgage to release equity to purchase a buy to let property, becoming a landlord. This is something that may occur with lifetime mortgage applicants also.

Additionally, there are instances wherein an applicant may look to raise the funds to purchase or put down the deposit for a second residential property, for a family member to live in. Please remember that with equity release, it must be your only residence, so you cannot live in that second home.

Gifted Deposits

Tying into the latter point, is the act of gifted deposits. This is where an applicable family member or friend donates a lump sum to you, allowing you to cover a portion of or the full amount of your deposit on a property.

This is a great way to help first time buyers get their foot onto the property ladder with a more suitable mortgage deal and better rates. This must be a gift and not a loan to be repaid, something of which the donor will need to give written confirmation of to the mortgage lender.

Family Inheritance

More commonly seen with equity release than a remortgage to release equity, but not completely unheard of in that regard, is to fund family inheritance.

In later life you may decide you would like to pass on your funds to one of your children or grandchildren, as their inheritance. We often see that those who do not have any family or friends to pass their funds onto, will make larger charity donations.

Fund Your Retirement

Finally, a homeowner may simply wish to fund their retirement lifestyle. Less common with remortgaging, this is a great way for later life applicants to spend the rest of their lives with a comfortable sum allowing them to do whatever they please with their equity.

Additionally, these released funds may help for things like any necessary care that is required throughout your later years, including if you end up needing to be in full-time, long-term care.


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Book a Free Remortgage Review or Later Life Mortgage Appointment

Whether you are looking to remortgage to release equity or take out a lifetime mortgage for the purpose of equity release, our team of remortgage experts and later life mortgage advisors would love to help you.

Book your free remortgage review or later life mortgage appointment and we’ll begin discussions on how we can help you next. If you’re looking to achieve equity release, we would encourage customers to include family members or trusted individuals in our meetings.

We provide an open & honest mortgage advice service, as a mortgage broker, and will always keep you informed and be transparent with you. If you meet the criteria and a lifetime mortgage is better suited for your plans than a remortgage, or vice versa, your mortgage advisor will inform you of such.

To understand the features and risks, ask for a personalised illustration. Equity Release may come in the form of a lifetime mortgage or home reversion plan.

A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means tested benefits. The loan plus accrued interest will repayable upon death or moving into long term care.

A home reversion plan involves selling all or part of your home to a plan provider in exchange for a tax-free lump sum.

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Author Image of Dan Osman - Head of Later Life at UK Moneyman Ltd.

About the Author

Dan Osman

Head of Later Life at UK Moneyman Ltd.

Dan joined the Financial Services sector back in 2002, but actually left the industry in 2008 before returning some years later. During the in-between years, he took a degree to become a Social Worker specialising in working with vulnerable adults.

Upon his return, Dan combined his experiences in the two sectors to become an Equity Release Specialist and he now heads up UK Moneyman’s Later Life Lending proposition. He genuinely believes in a holistic approach and always ensures his clients receive a proper consideration of all the options available, including non-lending alternatives to Equity Release.

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