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How Can I Release Equity From My House?

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As house prices continue to rise, many homeowners aged 55 and over are discovering their wealth is tied up in their property.

Analysis this year uncovered around £800 billion in equity to be released from UK homes, with an annual house price increase of 11% adding an average of £27,000 to the value of a UK home in just one year.

This has led to many asset-rich but cash-poor homeowners considering how to access the equity in their home, whether it be for home improvements, to pay off their mortgage, or for other retirement plans.

With such potential gains available from their property, these homeowners are looking for different ways to release equity.

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How can I release money from my house? 

Downsizing, remortgaging, taking out a retirement interest-only mortgage and equity release products are all ways to make money from your home, depending on your personal situation.

Equity release gives homeowners the ability to get cash from their house without moving or having to pay it back. The sum released is not taxable and can be used as desired.

How to release equity from your home 

Releasing equity from your home with an equity release product may be a good option. The most popular equity release product is a lifetime mortgage.

If you own a property valued at £70,000 or more and are aged 55 or over, you may be eligible to use a lifetime mortgage to access a tax-free cash sum.

This type of equity release allows you to secure a mortgage against your home and use the cash tied up in its value for whatever you wish. You do not need to make monthly payments, although you may make optional payments.

All the money owed, plus interest, will be paid from the sale of your home when either the last homeowner passes away or moves into long-term residential care.

How can I release equity from my house
All the money owed, plus interest, will be paid from the sale of your home when either the last homeowner passes away or moves into long-term residential care.

How do I release equity from my house under 55 UK?

If you’re under 55, you may need to remortgage in order to access equity. This could involve setting up a new mortgage with a larger loan-to-value ratio than you currently have.

On the other hand, if you’re over 55, you can consider equity release. There are two forms of equity release: home reversion and lifetime mortgages.

Who is eligible for equity release UK?

The criteria for being eligible are as follows:

  1. You must be 55 or older;
  2. You must be a homeowner with property in the UK;
  3. The property must have a value of at least £70,000.

Can I remortgage my house to release equity?

You can unlock the equity in your property by taking out a standard mortgage or a lifetime mortgage. So, in short, you can indeed remortgage and access equity release.

However, you must select either a standard or a lifetime mortgage – it is not possible to take out both at once.

Is equity release expensive
You can unlock the equity in your property by taking out a standard mortgage or a lifetime mortgage.

What happens if you stop paying your mortgage and walk away UK?

If you don’t keep up with your mortgage payments, your mortgage lender may repossess your home. This could also hurt your credit score, making it harder to get approved for a mortgage, mobile phone plan, or loan in the future.

What is the maximum equity release in the UK?

The maximum amount you can borrow with equity release is usually up to 60% of the value of your home. This amount depends on your age, the value of your property, and other factors. 

What if I have an outstanding mortgage?

As long as you are able to pay off your existing mortgage when it is finished, with either the money from the lifetime mortgage or with any other savings you have, you can still qualify for equity release.

Releasing equity is becoming more and more popular amongst those who are struggling to pay off their interest-only mortgages – it’s almost like a lifeline for them.

How can I release equity from my house?
If you think you might move home in the future, talk to your adviser as there are plans available with fixed and defined early repayment charges.

Will I still own my home?

A lifetime mortgage is similar to a conventional mortgage in that it is a loan secured against your home.

Your home remains your own and you have the right to live there until you enter long-term care or decide to move. You are free to sell your home and take the mortgage with you, provided it meets the lender’s criteria.

If you move to a property with a lower value than your existing home, you may need to pay back some of the lifetime mortgage, which could incur an early repayment charge.

If you think you might move home in the future, talk to your adviser as there are plans available with fixed and defined early repayment charges.

Can I involve my family?

Absolutely, taking out a lifetime mortgage can reduce the value of your estate and impact the inheritance you leave behind.

That is why it is essential for your loved ones to grasp how equity release works and be part of the decision-making process.

Is equity release expensive?

Average equity release interest rates can be similar to those of traditional mortgages, and can be locked in for the whole duration of the loan, so you know exactly what it will cost you.

By seeking advice from an independent specialist such as Responsible Equity Release, you will have access to some of the best equity release deals from lenders that are members of the Equity Release Council.

Your advisor will explain any other fees that could be involved, for instance legal fees, assessment fees and advisory fees. You will be given a breakdown of all the expenses involved, making sure you are fully aware of how much releasing equity will cost you prior to making the decision.

Releasing equity may also affect your eligibility for means-tested benefits, so your advisor can help you to think about the consequences of this.

Is it worth releasing equity from house
As long as you meet the requirements of the equity release firm, you can stay in your home as long as you need to.

Is it worth releasing equity from house?

You can use equity release to cover regular expenses, home upgrades, and other care costs. As long as you meet the requirements of the equity release firm, you can stay in your home as long as you need to.

Additionally, you may be able to relocate, as long as the new residence is approved by the equity release provider.

What is the downside of equity release?

The biggest downside of equity release is that you won’t get the full market value for your home. You’ll get far less money than if you were to sell the property on the open market. In that case, however, you’d still need to find somewhere else to live.

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