Is there a 'right time' to consider equity release?

Equity release is a big financial decision, and there’s no single ’right age‘ or moment that suits everyone. For some homeowners, it can be a helpful way to achieve their financial goals or supplement their finances in later life. For others, alternative options may be more suitable.

Understanding if equity release may be worth considering starts with looking at your personal circumstances, your future plans, and how you would like to use the value tied up in your home.

What Is Equity Release?

Equity release allows homeowners aged 55 or over to access some of the money tied up in their property, while continuing to live there. The most common type of equity release is a lifetime mortgage which is a loan secured against your property. The other type of equity release is a home reversion plan. This is where all or a percentage of your home is sold to a reversion provider in exchange for a lump sum, however, the amount you receive will be less than the market value of the percentage you have sold. In return, you are granted a lifetime lease, allowing you to remain in your home, usually rent‑free, for the rest of your life or until you move into long⁠-⁠term care. For both plans, any money released, plus interest, is typically repaid when the last homeowner dies or moves into long term case, usually from the sale of the property.

Situations Where Equity Release May Be Considered

While every situation is different, people often start exploring equity release when they reach a point where their home is their biggest asset, but they need more income to achieve all the things they want to do.

You might consider looking into equity release if:

1. Many homeowners find that retirement income isn’t enough to achieve all the things they want

For some homeowners, retirement income alone may not cover all future plans. Equity release can sometimes help by repaying an existing mortgage or providing additional funds to make retirement more comfortable.

2. You Want to Stay in Your Home Long Term

If you’re keen to remain in your current home rather than downsize or move, equity release may be one way to access funds without needing to sell. This can be particularly relevant if you’ve lived in your home for many years and it suits your needs, location, and lifestyle.

3. You Have Specific Plans for the Money

There are various reasons that many homeowners consider equity release for, including:

• Making home improvements or adaptations
• Helping family members financially
• Repaying debts or an existing mortgage
• Supporting lifestyle plans like travel or hobbies

Having a clear reason for needing the money ⁠-⁠ and when you need it ⁠-⁠ is an important part of deciding whether equity release is appropriate.

When Equity Release May Not Be the Right Choice

Equity release isn’t always the best solution, especially if:

• You plan to move home in the near future.
• You have other savings or assets that could meet your needs.
• You’re concerned about leaving an inheritance and haven’t fully explored how equity release would affect this.
• You’re eligible for benefits or support that could be affected by releasing funds.

This is why advice is essential. A qualified adviser can help you understand whether equity release is suitable, or whether other options may better meet your needs. It may be that a standard residential mortgage or a Retirement Interest Only mortgage (RIO) would better suit your circumstances. Or, you may be able to access your pension savings to help raise the funds you need. Age Partnership will help you look at these, along with other alternatives before helping you to decide whether equity release is something you may want to consider.

Why Timing Matters

With a lifetime mortgage, any unpaid interest is added to the loan so the outstanding balance increases each year, so releasing money earlier than necessary could mean a larger reduction in the value of your estate. On the other hand, you want to be able to enjoy the money when you want it the most.

Getting advice at the right time ⁠-⁠ before making any decisions ⁠-⁠ can help ensure you understand both the benefits and the long term implications.

Speaking to a Specialist Adviser

Age Partnership will take time to understand your circumstances, explain how different plans work, and talk through the risks and alternatives, so you can make an informed decision at your own pace.

Equity release may involve a lifetime mortgage, secured against your property, or a home reversion plan. It will reduce the value of your estate and impact funding long⁠-⁠term care.

Equity release requires repaying any existing mortgage. Money released, plus accrued interest, would need to be repaid upon death or moving into long⁠-⁠term care.

Advice is required before proceeding with Equity Release, and there may be other options which better suit your circumstances. Only if your case completes would our advice fee of £1,995 be payable. Other lender and solicitor fees may apply.

Request a callback or calculate how much you might be able to release.

Correct at the time of publication.