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How can I release money from my house?
As house prices rise and more people find their wealth is tied up in property, many are wondering ‘How can I release money from my house?’
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An increasing number of homeowners in the UK aged 55 and over are discovering that their wealth is tied up in the property they own. In fact, analysis this year revealed that there is currently over £600 billion in equity available to be released from UK homes.
With more than 14,000 people taking out equity release in the first quarter of this year, a large number of homeowners are finding what it can do for their finances.
With a variety of plans on the retirement checklist, from home improvements to clearing an existing mortgage, thousands of asset-rich but cash poor homeowners are considering how they can access the equity in their home each year.
And with such a potential value locked in the bricks and mortar of your home, you might be considering all the different ways to release equity.
How can I release money from my house?
Downsizing, remortgaging, taking out a retirement interest-only mortgage and equity release products are all options for releasing money from your home, depending on your personal circumstances. Equity release allows homeowners to access cash from their home without having to move or make repayments. The money received is not subject to tax and can be used for various purposes at the lender’s discretion.
How to release equity from your home
Releasing equity from your home with an equity release product may be a good option.
The most popular equity release product is a lifetime mortgage. If you own a property worth at least £70,000 and are aged 55 or over, then you could be eligible to use a lifetime mortgage to release a tax-free cash sum.
This type of equity release allows you to secure a mortgage against your home to tap into some of the cash tied up in its value, to be used to achieve your goals. Any payments made within your lifetime will be completely optional, giving you the power to control your budget. If you choose not to make any payments, or stop making them in the future, then interest will continue to roll up on a compound basis. The full amount owed, plus interest, is then designed to be repaid when the last homeowner either dies or enters long-term residential care, usually being achieved with the sale of the home.
The other type of equity release is a home reversion plan; this is much less popular than a lifetime mortgage. Instead of securing a loan on your property, you sell the provider all or a portion of your property, with the right to stay in your home – sometimes rent-free. When you die or enter long-term care, your house will be sold, and the reversion company will take its share of the proceeds. If you sold the whole property as part of the plan, all the proceeds go to the company.
If you are interested in a lifetime mortgage, the Telegraph Media Group can provide access to an 5-star equity release service through Responsible Equity Release. They can help you learn more and take you through the whole process.
Find out more about the Telegraph Media Group Equity Release Service.
How does the process work?
- Use the free equity release calculator and find out how much you could release.
- If you choose to provide your phone number, receive a call back from Responsible Equity Release’s UK-based Information Team.
- They can arrange a no-obligation appointment for you to meet with an equity release adviser in your area.
- Your adviser will conduct research on your behalf and propose a recommendation on whether you should release equity.
- Make an application with the support of the adviser. In as little as eight to twelve weeks, you could receive your tax-free cash.
What if I have an outstanding mortgage?
As long as you can pay off your existing mortgage upon completion, either with the proceeds of the lifetime mortgage or other savings you may have, you can still qualify for equity release.
Releasing equity can even be seen as something of a lifeline for those struggling to pay off their interest-only mortgages.
Will I still own my home?
Just like a conventional mortgage, a lifetime mortgage is a loan secured against your home. This means that your home remains your own and you have the right to continue living there for as long as you choose or until you enter long-term care.
Equally you are free to sell your home and move at any point in the future and take the mortgage with you (subject to the lender’s criteria).
If you do decide to move home after releasing equity and the new property is lower than your existing home’s value, you might be required to pay back some of the lifetime mortgage. This could incur an early repayment charge.
Speak to your adviser if you think you might move home in the future, as there might be plans available with fixed and defined early repayment charges.
Can I involve my family?
Absolutely. A lifetime mortgage will reduce the value of your estate and could affect the inheritance you leave, so it is important for your loved ones to understand how equity release works and be involved in the decision-making process.
If you choose to use the Telegraph Media Group Equity Release Service, your Responsible Equity Release adviser will actively encourage you to involve your family in the entire process, including making them welcome to attend your appointments with your adviser if you wish.
Is equity release expensive?
Average equity release interest rates can be comparable to those of conventional mortgages, and can be fixed for the lifetime of the mortgage so you know exactly what one will cost you over its duration.
Taking advice from an independent specialist such as Responsible Equity Release means you will have access to some of the best equity release deals from lenders that are members of the Equity Release Council.
Your adviser will explain any other costs that may be involved, such as solicitor fees, valuation fees and adviser fees. You will be provided with an illustration detailing all the costs involved, ensuring you are fully aware of what releasing equity will cost you before you commit to going ahead. Releasing equity may also affect your entitlement to means-tested benefits, so an adviser can help you to consider the implications of this.
How do I find out more about equity release?
You can use the calculator on this page to obtain an estimate of how much tax-free cash you could release from your home – and receive a free copy of the 20-page Telegraph Media Group Guide to Equity Release. This has been co-produced by the Telegraph Media Group and Responsible Equity Release.
Should you choose to provide a phone number, a member of Responsible’s Information Team will get in touch and give you the opportunity to have your questions answered. They can also arrange a no-obligation appointment with an equity release adviser in your area.
To begin, simply enter your house value and age and click ‘Calculate now’.
Try our free equity release calculator now and see how much tax-free cash you can release
Read more:
- How to calculate buying out your spouse's share of the house
- How to pay off a mortgage early using equity release
- How much does a loft conversion cost?
Important information
Equity release is only available to homeowners that own a property within the United Kingdom.
Please note we are not authorised to provide advice or arrange equity release products, so we have partnered with a leading equity release specialist to provide this service to you.
The Telegraph Equity Release Service is provided by Responsible Equity Release. Responsible Equity Release is a trading style of Responsible Life Limited. 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. Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,690.
Telegraph Equity Release Service is provided by Responsible Life Limited
The above article was created for Telegraph Financial Solutions, a member of The Telegraph Media Group. For more information on Telegraph Financial Solutions click here