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Equity Release Mortgages
If you’re 55 or older, you may be considering ways to release some of the value of your home without having to move. Equity release could help you use some of the value you’ve built up in your home to kickstart your plans in later life. You can choose to release money as a lump sum or in smaller amounts to meet your needs and you'll continue to own your home.
What is equity release?
Equity release is a way of unlocking some of the value in your home as tax-free cash. This is done by taking out a lifetime mortgage. You can choose to take your cash either as a lump sum or as smaller amounts over a period of time.
There are many reasons why homeowners choose to release equity. It can help with retirement planning, or to pay off an existing mortgage. You might be planning to make some home improvements, or maybe you want to raise some cash to give as a gift to family or friends.
The amount of equity you can release usually depends on:
- The value of your home
- The age of the people named on the mortgage.
How does equity release work?
You can release equity with a lifetime mortgage, which is a type of loan secured against your property. You can take a tax-free lump sum for the entire amount of the loan, or opt for smaller payments over a longer period of time.
The amount you can release will be dependant on your age and property value.
You won’t have to move out of your home, and there are no monthly repayments to make. The loan (plus interest) is usually repaid through the sale of the property when the last surviving person named on the mortgage dies or moves into long-term care.
Perhaps you’re planning ahead for retirement and looking to increase your home’s value with some home improvements. Releasing a lump sum can help you pay for this.
The money can be used for any purpose, such as travel, or to help your grandchildren with their own financial futures – as a mortgage deposit, or to support their education.
Read more about equity release
We have more detailed information here:
How does a equity release work?
How can Lloyds Bank help?
If you want to talk through if equity release might be right for you, we can refer you to our partners Scottish Widows Bank, a division of Lloyds Bank plc. They offer a Lifetime Mortgage that could help you unlock some of the value from your home.
Scottish Widows is proud to be a member of the Equity Release Council and abides by its standards. The Equity Release Council was established 30 years ago and is the industry body for the UK equity release.
After discussing your options with a Scottish Widows Bank Later Life Lending Adviser, you'll know if equity release could be the right choice for you.
Things to consider based on your individual circumstances
It’s important to understand the types of things you need to consider before releasing equity from your home.
- You can take a cash lump sum, or a lump sum and then smaller amounts over time.
- You’ll continue to own your home until the mortgage needs to be repaid upon the death or long-term care of the last surviving borrower.
- If you want to make sure that there’s some equity left for you, or to leave to your friends or family, when you apply for your Lifetime Mortgage you’ll need to ring fence a percentage of the value of your home.
- No monthly payment is needed but interest will continue to be added to the amount owed.
- You’ll have the right to move to another property (subject to lending policy and criteria at the time) without having to pay any early repayment charges.
- You’ll be protected by the 'No Negative equity Guarantee' meaning your estate won't have to repay more than what your home sells for even if you owe more.
- Your entitlement to means-tested benefits could be affected if you take out a lifetime mortgage.
- Releasing equity from your home also reduces how much you’re able to leave as an inheritance.
- You can make some overpayments over the life of the mortgage without penalty; however, early repayment charges may be payable if you want to repay more or repay the mortgage in full. These do not apply on death or moving into long-term care.
Equity release explained : FAQs
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Take a look at sale prices for similar homes in your area to get an idea of how much equity you have in your home. The Scottish Widows Bank also offers a free independent property valuation.
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There are fees involved with equity release, similar to when you arrange a conventional mortgage. You may need a valuation on your home before you’re accepted. If so, however, with a Scottish Widows Bank Lifetime Mortgage you'll get a free independent property valuation, along with free conveyancing and you’ll also get £600 paid towards the cost of independent legal advice. Lifetime mortgage rates are fixed at the rate you arrange, which means the interest rate won’t change over time.
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A lifetime mortgage application tends to take around eight weeks to complete, from initial application to the first release of funds. Some applications can take more or less time depending on the individual circumstances of your application
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Yes, it’s possible to sell your house if you have released equity from it. If you wish to move to a house of the same or higher value, your provider may be able to switch the current lifetime mortgage to the new property, subject to meeting lending criteria at the time. This is called porting. If you’re moving to a home of lower value, you may be required to repay the lifetime mortgage.