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ARISTX Capital

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Equity Release

Equity Release

Equity Release: Understanding Your Options

Equity release allows homeowners to access some of the value tied up in their property while continuing to live there. It is most commonly considered later in life to supplement retirement income, manage larger expenses, improve a home, or provide financial support to family members.

As equity release is a long-term financial commitment, it is important to understand how it works and the impact it may have on your future finances and estate. Regulated advice is essential before proceeding.

In the UK, equity release is available through two main options: lifetime mortgages and home reversion plans. Each works differently and suits different circumstances.

Lifetime Mortgage

A lifetime mortgage is the most common form of equity release. It allows you to borrow against the value of your home while retaining full ownership, provided the property remains your main residence.

These products are generally available from age 55. Funds can be released as a lump sum, in stages over time, or a combination of both. Interest is charged on the amount borrowed. Some plans allow voluntary interest payments to help manage the balance, while others allow interest to roll up and be added to the loan.

The loan and any accrued interest are usually repaid when the property is sold, which typically happens when you move into long-term care or pass away. Most modern lifetime mortgages include a no negative equity guarantee, meaning you will never owe more than the value of your home.

This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.

Lifetime Mortgage Risks

Before proceeding, it is important to understand that:

  • Interest can build up quickly if no payments are made, increasing the amount owed
  • The value of your estate will be reduced, which may affect inheritance
  • Entitlement to means-tested state benefits may be affected
  • Your ability to move home or remortgage in the future may be limited

Lifetime mortgages are designed to last for life and may be expensive to exit early.

Home Reversion Plan

A home reversion plan works differently to a lifetime mortgage. Instead of borrowing against your home, part or all of the property is sold to a reversion provider in exchange for a cash lump sum, regular income, or both.

These plans are usually available from age 60. Although ownership of a portion of the property is given up, the right to live in the home for life, or until moving into long-term care, is retained without paying rent. When the property is eventually sold, the provider receives their agreed share of the sale proceeds, with the remaining value going to you or your estate.

Home reversion plans are less common than lifetime mortgages and are typically suitable only in specific personal and financial circumstances.

Home Reversion Plan Risks

You should be aware that:

  • Ownership of the sold share of your home is permanently given up
  • You will not benefit from future increases in the value of that share
  • The amount left to your estate will be reduced, which may affect inheritance planning
  • It can be difficult or costly to change or exit the plan early
  • Your options to move home in the future may be restricted
  • Entitlement to means-tested state benefits may be affected

The amount received for the share of the property sold will usually be less than its open market value, reflecting the right to live in the property rent-free.

Important Information

Equity release is not suitable for everyone and should only be considered after exploring alternative options, such as downsizing or using other savings. It is a long-term decision with lasting financial implications.

All equity release advice must be provided by a suitably qualified adviser authorised and regulated by the Financial Conduct Authority.

This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.

Specialist Equity Release Advice

We provide fully regulated equity release advice, delivered personally from initial discussion through to completion. Every recommendation is based on a clear understanding of your circumstances, goals, and long-term plans.

Equity release is a significant decision. Our role is to clearly explain the options, risks, and long-term implications, so you can make an informed choice that is right for you.

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