How does Equity Release Work?

Our expert guide to releasing tax-free cash from your home

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Lifetime/Equity Release

What is the maximum Equity Release mortgage available to me?

Simply input the value of your home and use the moveable toggle to select your age

The Retirement Years Should Be Filled With Freedom to Enjoy Great Times With Your Loved Ones

Retirement comes at a cost; releasing equity in a home can be a great way to release money from your house to enjoy these years. This money can be spent on holidays, home improvements, helping your children or grandchildren. The fact is, you can spend as you so wish!

However, equity release mortgages need specialist advice and guidance; these mortgages are not suitable for everyone, and therefore, independent advisers’ help will guide you to the best solutions the marketplace has to offer, including other Later Life solutions such as Retirement Interest-Only mortgages.

It starts with a ‘no-commitment’ conversation with one of our equity release advisers to help you fully understand if there are alternatives. Following a conversation, you will have a good understanding of equity release, how this mortgage works and if it is suitable for you.

^{*For our Fee Free guarantee, the minimum initial advance must be £60,000; otherwise, a fee of £699 is payable}

Equity Release in a Nutshell

The equity in your property is the value of your home minus any outstanding mortgage or other loans secured against it.

Historically, the equity of one’s home is passed on as an inheritance upon death, but nowadays, many retirees wish to do something with their equity at a time which suits them rather than wait for the inevitable!

We specialise in Lifetime Mortgages which is the most popular equity release product. There are a few options with this type of mortgage which we will cover in this brochure.

Are You Eligible?

We stated earlier that a Lifetime mortgage is not for everyone. Ultimately, there are three main criteria for this type of mortgage.

You are aged 55-95

You Own Your Property

The Property is Mortgageable

You Choose How You Wish To Spend The Money

The most popular reasons for equity release mortgages are

Home Improvements

Grandchildren’s School Fees

Helping Your Children Move Home

Holidays

Replace Car

Paying off the Existing Mortgage

Clearing Debt

Overseas Property

Lifetime Mortgage Options

Equity release mortgages have evolved in recent times. The great news is that these, once expensive products, have become much more competitively priced as new entrants join the market. This has made them a popular choice in recent years. There are two types of lifetime mortgage.

Lump Sum Lifetime Mortgage

This type of Lifetime mortgage will release an initial tax-free lump sum for you to use however you wish. The agreed Interest is compounded and added onto the mortgage capital otherwise known as ‘rolled-up interest’. The mortgage generally comes to an end upon death of the second mortgage applicant (if it is a joint mortgage) or the second mortgage applicant enters long-term care.

Drawdown Lifetime Mortgage

This works similarly to the lump sum option whereby you receive the initial lump sum, but also you agree to a drawdown facility with the mortgage lender. You can then ‘drawdown’ the remaining cash in stages as and when suitable for your needs. The main benefit this option gives is that you only pay interest once you have drawn the cash meaning that the interest adds up more slowly ensuring there will be more equity left in your property for family.

Features of Both Plans

Downsizing Protection

Circumstances change, whether it be due to health or family reasons. Having this feature gives you the flexibility to move to a smaller home. Typically, you would repay the loan without penalty subject to the lender’s criteria, then take a new mortgage on the new property. This should give you full peace of mind!

Inheritance Protection

For many, leaving a cash legacy to their loved ones is paramount. This feature allows you to ring-fence a percentage of your property to ensure that, when your property is sold, a percentage of the property will go to your family and will not be affected by the interest which accrues.

Partial Capital Repayments

When you have a rolled-up interest Lifetime mortgage the compounded interest accrues meaning the loan size increases. For example, if your interest rate were at 3% then the loan would double in just over 23 years. While this is an excellent option for someone who was asset-rich and cash-poor their preference, given a choice, could be to leave more equity for their family. A partial capital repayment option could be suitable if there were say an inheritance or a future investment matures. This option would typically allow a capital repayment up to a maximum of 15%.

Interest-only Payment

This feature will allow you to make monthly interest payments to ensure the interest does not compound at the rate it otherwise would do on a rolled-up basis. Providers enable you to repay the full interest payment each month or a partial amount with the option to convert into a fully rolled-up scheme (known as a hybrid plan). This solution is only available to those who have expendable income. For example if someone aged 60 was working for another five years then it could be prudent for an interest-only Lifetime mortgage which converts to a fully rolled-up plan in five years.

Enhanced

If you, or your partner, have health conditions or are a smoker then it could be possible to release a higher percentage loan-to-value. Qualifying health issues include Heart issues, diabetes or high blood pressure. It is possible that the interest rate charged by the provider could be less too. Example: if you were 55 years old and the maximum LTV was 25% if you had high blood pressure and previously suffered from cancer, the maximum you could borrow could rise to 28.5%.

How Much Cash Can I Release?

The amount you can release is based on the value of your house, your age(s), and your health. The older you are, the more cash a provider will allow you to borrow. As part of our initial conversation we can tell you exactly how much you can expect to borrow.

Is Negative Equity Possible?

As experts in this field we would typically recommend products which are ‘Equity Release Council (ERC) Approved’. The key benefit of ERC is that there is a no negative equity guarantee meaning that once the property needs to be sold there will not be a debt left for your estate to pay. This gives you peace of mind!

Let's get your mortgage journey going...

Release Tax-Free Cash From Your Home With Our Equity Release Mortgages

Conran will expertly navigate you through the process, step by step.

SPEAK TO US

Our equity release expert will have an initial conversation and arrange for a meeting with you.

DISCUSS WITH YOUR FAMILY

In the meantime we would encourage that you speak to your family about what you are looking to do. They are welcome to join the meeting if you are comfortable with this?

FIRST APPOINTMENT

For us to advise you correctly and ensure a Lifetime mortgage is suitable for you we will need to know lots about you and what you want to achieve. This meeting is purely a fact-finding mission for us both; after all, you need to ensure we are the correct fit to advise you too.

FINDING THE MOST SUITABLE PLAN

If you feel Conran Mortgages are the best fit for you, then we will search the whole of market to find the most suitable plan, with the best interest rates, for you.

SECOND APPOINTMENT

At this meeting we will present you our recommendation and provide you a personalised illustration for consideration.

PAPERWORK

We are not pushy salespeople so if you feel comfortable with our findings and you wish to go ahead then we will happily submit your application to the plan provider. Your property will need to be surveyed by an independent surveyor.

MORTGAGE OFFER ISSUED

Once the plan provider is happy they will issue a formal offer which includes full terms and conditions of your plan.

LEGALS

You will need advice from independent solicitors to cover off all legal aspects.

COMPLETION

Roughly 8 – 12 weeks is a typical timescale, although it cannot be guaranteed.

CASH IN YOUR BANK ACCOUNT

It’s your money, go and enjoy yourselves and fulfill your retirement dreams.

Or give us a call to talk to one of our expert advisers

020 8528 2251

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Frequently Asked Questions

Equity release – lifetime mortgages

Conran Mortgages offer lifetime mortgages, which is a loan secured against your home. Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.
You should always think carefully before securing a loan against your home
Our equity release advice relates to plans with an initial advance of £60,000 and above. For any advances lower than £60,000, our fixed advice fee of £699 is only payable on completion.

Later life mortgages

A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. You should always think carefully before securing a loan against your property