How do you know if you will be eligible for equity release? There are several boxes which need to be ticked and Mark Gregory of Equity Release Supermarket runs through them in this week’s Ask the Expert…
The QuestionI am about to make an application to release equity from my home. I own a Victorian terraced property in South London, and it’s valued at £650,000. I wish to release £200,000 or thereabouts and I am aged 74. I plan to gift the money to my children.
What are the criteria my home and I myself must fulfil to qualify? Thank you for your advice.
Hello, and no problem, I am happy to provide you with the information to allow you to make a financial gift in your lifetime to see your children benefit.
I can confirm that the very basic requirements for Equity Release is that you must be at least 55 years of age and your home must be worth a minimum of £70,000 – therefore you already tick two of the boxes.
Furthermore, you must be a UK resident and your home must be mortgage free, or you plan to use the proceeds of equity release to replace your existing mortgage.
Lenders do have property criteria they underwrite, but if it’s of standard build and in good condition, then so far so good.
With equity release one of the most popular solutions is a flexible Lifetime mortgage, and based on your age and property value, you may be able to borrow up to around £300,000, or more, depending on your current health. Certain ‘enhanced’ equity release plans from lenders such as Aviva and Just Retirement, allow you to borrow extra if specified health conditions exist.
With a Lifetime mortgage there are now many flexible features including borrowing either as a one-off lump sum, or a lump sum with a cash reserve facility (drawdown) that allows you to access further funds in the future, if needed.
The unique feature of a Lifetime mortgage is the flexibility around payments because all plans on the market have the option for you to borrow the capital you need and you decide if you want to make full, partial or no payments at all.
In-fact, if you do choose to make repayments, it could be just the interest, or the interest and some capital you repay – the decision is yours.
Of course, if you decided not to make payments, the interest on your loan will compound and reduce the equity in your estate.
Further considerations are if you are in receipt of means tested benefits, as they could be impacted if you raise capital.
Therefore, with so many flexible options and choices available, I strongly suggest that you take whole of market, independent advice without any obligation, and our qualified advisers are always here to help and guide you.
Mark Gregory, founder and CEO of Equity Release Supermarket, is here to answer your questions. Mark is an adviser himself with over 20 years equity release experience.
He launched Equity Release Supermarket 10 years ago and it has grown to become one of the UK’s leading equity release specialists.
Email kate.saines@emap.com to ask Mark a question
