Frequently Asked Questions

Have questions? We’ve got the answers for you!

An Equity Release mortgage is a type of loan secured against your property for home-owners aged 55+ that continues until the single person (or second one of the couple) dies, goes into residential care or earlier leaves the property. Lifetime mortgages account for over 99% of all Equity release. You retain ownership of your home with a lifetime mortgage which means that you will remain the legal owner of the property. This is very different to a home reversion plan where you sell a proportion of your property and do not retain legal ownership. With a lifetime mortgage, you most certainly do retain ownership. There is still a huge amount of misinformation surrounding equity release, so it is important to resource yourself with information from reliable sources such as the Equity Release Council website.
The ethos of The Equity Release Lady is centralised upon ensuring that you understand the core concepts of Equity Release to `provide support education and empowerment for women exploring their later life lending options’. A fundamental part of the advice process to ensure that you understand interest rates and how they affect your lifetime mortgage. Overpayments, compound interest and any early redemption charges are essential to understand, as well as the details of your specific deal. With most lender deals, you will have an interest rate fixed for life but you can choose to pay a monthly interest payment so that you never have more money outstanding that the original loan amount. In addition, you can pay 10% of the capital amount off each year to reduce the loan amount if you choose to do so. If you choose to pay more than this, then there will potentially be Early Redemption charges to pay. The Equity Release lady is dedicated to ensuring that each client’s needs are met holistically, through education and empowerment around their finances enabling their individual needs and needs to be met accordingly.
The main risk is in receiving incorrect or inaccurate advice that does not match your situation. Examples include: being given wrong rates, terms and conditions, early redemption charges which are onerous, inability to move house, or even Equity release being the wrong course of action. It is important to ensure that your advisor firm is a member of the Equity Release Council and that you read their previous client prior to instructing them.

“WE ARE THE 86%”. We know that 26% of over 55’s using their property to raise cash through Equity Release are single females. 60% are females as part of a couple. This means that a substantial 86% of present-day Equity release decisions are shaped by women.

However, the industry remains largely male-dominated, with women vastly under-represented. According to the Equity Release Council, just one in five equity release advisors is female.

The Equity Release Lady is the Company to drive this change to the industry.

As a Company, we aim to challenge the gender divide and realign the balance through the establishment of a brand of female-led advisors, focused upon advising women.

We boast an outstanding, client-focused service, driven to empower women navigating their later life lending option, through the empowerment, education and support provided by our experienced female advisors.

After all, women understand women. Women empower women.

“There is no limit to what we, as women, can accomplish.” Michelle Obama

In the article entitled “The Equity Release Lady readies launch with a target to drive up female advisers”, Jim Boyd, Chief Executive of the Equity Release Council, affirms this importance, stating: “we recognise the importance of equality, diversity and inclusion and the value that individuals from different backgrounds can bring to the council and the wider market. We strive to ensure different voices feed into the Council’s work, and that these voices represent the consumers we engage with.

Indeed, the ethos of The Equity Release Lady is centralised upon ensuring that you understand the core concepts of Equity Release to provide support education and empowerment for women exploring their later life lending options.

We are dedicated to ensuring that each client’s needs are met holistically, through education and empowerment around their finances enabling their individual needs and needs to be met accordingly which is further endorsed by Jim Boyd: “I welcome The Equity Release Lady focusing efforts in this area. I am supportive of any company within the sector that seeks to increase diversity and I congratulate the team on the launch of their new business”.

One alternative is not to take out a lifetime mortgage. Other options that can be considered included downsizing your property, for example, moving to a cheaper home or using savings to discharge an existing residential mortgage. You may choose to encash your investments or look at a different loan such as a residential mortgage or another type of mortgage called a Retirement Interest Only mortgage. It can also be an option for some people to ask for financial support from family members. Your specific needs and circumstances require exploration with your Advisor to consider your specific needs and requirements before determining if equity release is the correct option for you.
You can protect some equity in your home for your beneficiaries providing this was done at the point of application. Alternatively, you may choose to pay all or some of the interest or capital on the loan which would decrease the roll-up of interest and decrease the amount owed. Most lenders will permit a 10% repayment of the capital amount borrowed each year. If you chose to do this as well as making monthly interest payments, this would serve to reduce the loan amount.
Most standard construction houses will be considered for equity release. However, there is variability on policies amongst lenders which may impact the individual lenders’ decision such as Isonene foam insulation, flood risk areas and proximity to commercial premises may all affect the decision-making process of the lender. Whereas one lender may consider a property to be in a flood risk area, other lenders may deem not. This variability is due to different individual lender criteria.
With regards to state benefits, it is crucial to be aware that for some people this could mean the reduction or loss of means tested benefits or decreased value of the estate for beneficiaries. If you are in receipt of ‘non-means tested benefits’ then equity release would not affect your entitlement. Your advisor will discuss your benefits entitlement with you and depending upon your reasons for equity release this may or may impact your claim.

This depends upon the nature of the lifetime mortgage that you decide to take out.

If your partner is named on the life- time mortgage then they would have the same rights as you anyway.

Your beneficiaries could potentially be affected by you taking out equity release against your property, leaving them with little (if any) money depending on whether you decided to pay the monthly interest or not and the increase in house prices over time.

Your advisor will actively encourage you to have informed family discussions around these factors so that you can make the best decision for yourselves and your family.

It is so important to discuss your specific needs and objectives thoroughly with your advisor who will be able to ensure your circumstances are considered fully.

Compound interest can be scary if you have a high-interest rate and do not know how to slow or stop the accrual of interest. As an example, if you decided not to pay the interest on a £107,201 loan, at a 3.09% rate of interest will take around 23 years to double to £214,402. Should you elect to pay approximately £276 per month then the debt would stay around the same as the original loan amount. If you pay more than this, then it would reduce the loan amount outstanding.
It is vital that you obtain advice from a lender approved by the Equity Release Council. These lenders offer a no -negative equity guarantee so that you will never owe more than the value of your home. We recommend visiting the equity release council website at equityreleasecouncil.com for details of fully approved advisors.
Expensive is of course subjective but you are permitted to add the costs to the overall cost of the lifetime mortgage if you wish. There are 4 associated costs. 1. Solicitors: £850+ 2. Broker fee: £1490 3. Valuation: lender pays 4. Lender booking fee: some are £0 whilst others have associated fees
With a “no negative equity guarantee” you will never owe more money than your property is worth when it is sold. Any money left over upon the sale of your property will either be paid in line with your Will or intestacy rules. This means that you have peace of mind because you will never owe more than the value of your home and even if house prices decreased, there would be no liability to pay the shortfall on the loan amount. As an example: Your loan amount is £300K but your property is sold upon your death for £250,000. Your estate would owe nothing. This is all covered by the “no negative equity guarantee”. As a result, there would not be a requirement for the estate to discharge the monies owed. It is, therefore, important to make sure that any product you have is covered by this guarantee so that no potential liability will fall to your estate.

The positive of equity release is that lifetime mortgage rates are fixed for life for the duration of the mortgage so you do not experience fluctuations as you would with some standard residential mortgages.

The mortgage will only end upon death, entry to permanent residential care, or otherwise abandoning the property.

If you have a partner, who is also on the lifetime mortgage, then this will end upon the death of the second partner.

In June 2021, the rates are currently between 2.8% – 6.48% depending upon the amount borrowed and the specific lender.

With equity release, you could take a lump sum upfront and receive it all straight away, or choose to take an initial amount with the ability to draw the remaining funds at future points. The drawdowns are subject to lender rules on the minimal amount that you are permitted to drawdown and the interest rates may vary as they are usually charged at the lender’s prevailing rate.
You would also be able to move to another property providing that this property is a “suitable alternative” which means that the lender would agree to lend on the property if it was a new application. The lender may ask you to repay some of the mortgage from the sale of your property if the new property were lower in value. There may be restrictions on particular types of properties which would not be suitable to the lender, and this would be subject to the specific policy of the individual lender.
There is not a specified end date with lifetime mortgages as it remains in force until you either die, sell the property, or move into long term residential care, or earlier leave the property. So early redemption charges are not payable if one of these factors brings the mortgage to an end anyway! However, they can come into force if you repay some or all of the amount borrowed before the specified end date detailed in your mortgage contract. You will be provided with a Key Facts Illustration and an Offer letter prior to taking out your lifetime mortgage which will clearly illustrate the Early Redemption charges applied to the loan. Any decision to overpay the loan over and above the permitted annual amounts (usually 10%) or repaying the entire loan early should be balanced against the potential early redemption charges. If you are planning on moving house within the next 5-8 years or wish to pay more than the standard 10% of the loan amount each year, it would be especially important to discuss this in detail with your advisor to ensure that any charges were balanced with your needs.

Your lifetime mortgage will need to be repaid if you were to die or move into long term residential care. In the event of your death (and if you do not have a partner or spouse who is entitled to live in the property) then the outstanding loan amount will usually be repaid within 6 months to one year. There is no early redemption charge to pay in these circumstances.

You may decide to live with other family members, purchase another property or port your existing lifetime mortgage.

If you wished to move to an alternate property this is usually permitted by the lender providing the property is considered a “suitable alternative property” and would fulfil the lender’s lending criteria at the time of your move. This is because certain properties such as those close to commercial premises, or non-standard construction may impact the lender’s decision.

If your personal circumstances change it is important to discuss your change with the lender at the earliest opportunity to ensure that the terms and conditions allow for your change and to agree to a suitable solution.

Equity release rates can but (not always) be funded in a different way and over an open-ended term with the mortgage only coming to an end at a specified event rather than when the contractual payments end. Consequently, the lender does not know with surety when the full amount will be paid, which accounts for why the rate is often higher.

Unlike a standard residential mortgage, with equity release, there are no affordability checks.

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