What is equity release?

Equity release: The fastest growing sector in the mortgage market

What is equity release?

Equity release provides homeowners over the age of 55 with the option to release money from their home. They can continue to live in the property whilst supplementing their income without necessarily having to commit to any monthly repayments.

A lifetime mortgage is a type of mortgage where you can choose to extract some equity in a single lump sum and/or in smaller amounts over time up to the maximum limit agreed with the plan provider. You retain full ownership of your home and any interest on the loan can be paid or rolled up. The loan and any interest is repaid by your estate in the event of your death or as a result of moving into permanent long term care.

What can equity release be used for?

Equity release can be used for a variety of purposes to suit your lifestyle. These can include:

• Adapting/improving your home to enable you to remain living in it independently for longer
• Paying off debts, such as outstanding mortgages or credit cards
• Paying for help around the home, including domiciliary social care
• Purchasing a new car or other major item
• Providing financial assistance to your children and grandchildren, perhaps with a deposit on a house or to help them through university
• Taking the holiday of a lifetime

About the market

The Equity Release Council was formed in 2012 to promote high standards of conduct and practice in the provision of advice and mortgages in the equity release market.

Their members will:

• Ensure that all their actions promote public confidence in equity release as a potential retirement solution
• Act at all times in utmost good faith
• Communicate high expectations for equity release outcomes in all their dealings
• Ensure conflicts of interest are managed fairly and reduced to the lowest practical level
• Exercise due skill, care and diligence in all that they do and uphold the standards set out by their professional bodies at all times
• Always act with the best interests of their clients being paramount, treating customers fairly in all their actions.

The robust standards of consumer protection have underpinned the development of a flourishing sector, and the market is growing at a rapid rate. Experts predict further growth as the concept of a lifetime mortgage becomes more attractive and familiar to people especially in light of interest rates being at an all time low.

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