Equity Release

5 Reasons You Should Seek Equity Release Advice

5 Reasons You Should Seek Equity Release Advice

If you’re thinking about equity release, there are few things you should consider before you apply. Equity release is a useful way to free up cash from your home in retirement. You might need to meet increasing living costs. You might be looking at investing. Or you might want to help your loved ones get on the property ladder. Whatever your motivation, you should seek equity release advice from a specialist adviser first. Here are five reasons why:

#1 They’ll explain the options available to you.

Due to rising demand, the number of equity release products on the market has increased dramatically in recent years. With specialist equity release advice, you can find specific products that suit your needs. Equity release products are split into two broad categories: lifetime mortgages and home-reversion plans. A lifetime mortgage comes with a fixed interest rate. Unlike a typical repayment mortgage, you don’t pay it off in regular instalments. Instead, your debt is rolled up. This means interest is calculated on an ever-increasing total. You only pay off the lifetime mortgage when you come to sell your property or move into long-term care. A home-reversion plan means an equity release company buys a fixed share of your property from you but below the market value. This is because the company is taking a risk on house prices. They also don’t know when they’ll get their money back as the property wouldn’t be sold until you die or move into care. They make money by waiting for the value of their share to increase over time. When you seek equity release advice, your adviser will explain the difference between products and recommend the best option for you.

#2 They’ll save you money
Equity release advice can help you find a mortgage with the most competitive equity release interest rate and the lowest charges. Some products allow you to make monthly or ad-hoc interest repayments to keep the total debt down. Some start out with you committing to pay the interest and then you can switch to a roll-up basis in the future. You can also choose a drawdown product that gives you access to the funds in stages so you only pay interest on the equity you’ve actually released. A specialist equity release adviser can suggest ways to cut your costs and find products with the right features for you.

#3 They’ll make you aware of the costs
With many equity release mortgage products, the interest rolls up. This means the loan is only repaid through the sale of your property when you die or move into long-term care. The total you owe can grow quickly because of the compound interest. If you live for many years after taking out the mortgage, you could find the debt eventually exceeds the value of your property. This is called negative equity. To avoid negative equity, you must take out a plan with a lender approved by the Equity Release Council. These lenders offer a No Negative Equity Guarantee. This will ensure you never owe more than your home is worth. An equity release adviser will show you which products protect your estate from additional costs. They will also provide a detailed projection showing how much the plan will cost over your lifetime. That way, you can see the financial implications of any decision you make.


#4 They’ll help you protect your family’s inheritance
If you choose to release equity, you will have less to pass on to your family. Typically, your home will be sold to repay the mortgage. Depending on how much interest has accrued, there may not be much left over. An equity release adviser will explain how to maximise the value of your estate. For example, certain equity release products allow you to ring-fence some of the equity in your home as a guaranteed inheritance. You should discuss your plans with your family before taking out an equity release product. Your family may prefer to help you financially to preserve their future inheritance.


#5 They’ll make sure equity release is right for you
With equity release, it’s important to understand your current needs and your future wants. Using a portion of your property wealth now may reduce the value of your estate in time. This could also affect your entitlement to any means-tested benefits. Equity release advisers will consider all of your options before recommending equity release. You may prefer to downsize. Or use another form of borrowing, such as re-mortgaging your home or
getting help from your family.


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Is equity release right for you?
The Money Guardian can help you decide. Our expert advisers will be glad to guide you through the process and offer no-obligation recommendations. If you do decide to go ahead, we can handle the application and make sure the whole process is as easy as possible for you. Equity release may involve a lifetime mortgage, which is secured against your property. Or a home reversion-plan, which requires the sale of your property for a discounted price. To understand the features and risks, ask for a personalised

Dominic Brierley

Dominic Brierley

Dominic joined The Money Guardian as a senior partner. He brings a wealth of experience from 30 years in financial services.

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Equity release 1

Equity Release Later Life Divorce

Equity Release Later Life Divorce

Geoff, 65, and Jane, 63 are both retired, but have decided to go their separate ways

They would like:

  • for Jane to stay in the family home so their grandchildren can continue to stay over
  • more money to help them pay for the immediate costs of a divorce
  • to fund enough money for Geoff to move out and afford his own place

After 40 years of marriage Geoff and Jane have mutually decided to divorce, and are looking for the best way to move forward. They have two grandchildren, which Jane looks after regularly so her daughter can work and save on childcare.

Geoff has agreed that Jane can remain in the family home. His pension is enough for him to live a comfortable day-to-day life, but he needs some additional money to cover the immediate costs of the divorce and move out.

Jane receives a moderate pension, but has no savings or investments to speak of. She’s worried she won’t have enough income until she gets her share of the divorce settlement.

Their home in Thatcham, which they own outright, is worth £400,000. They have both considered downsizing but want to avoid doubling their moving costs and causing any emotional stress by selling the family home.

One option they consider is to release a lump sum of money from the value of the family home to facilitate the divorce, using a Lifetime Mortgage.

Based on their circumstances, Geoff and Jane release the maximum loan possible as an initial advance using a Lifetime Mortgage.

Overall, based on Geoff and Jane’s ages and property value they can:-

  • Access up to £144,000
  • Receive this maximum loan as a lump sum
  • Make no monthly payments

Equity release 2


The lifetime mortgage allows Geoff and Jane to unlock some of the equity from their property without having to sell it. This avoids paying additional moving costs and the upheaval of losing the family home.

A lifetime mortgage generally completes within 8 weeks or so whereas selling their home could take months.

It can help relieve the financial stress at an expensive and emotionally difficult time for both parties.

Jane can continue to care for her grandchildren and remain in the family home. Should she wish to move and downsize once they’ve grown up, she can take the lifetime mortgage with her, subject to the terms and conditions of the lender.

Geoff could use the money to buy an apartment or use it as additional income to pay rent on a property


As specialists in Equity Release, we take time to explain the risks involved with the product before Geoff and Jane decide if it is right for them.

  • A lifetime mortgage is a loan secured against their home
  • Interest is charged on a compounding basis, which means interest is charged on the loan plus any interest already added.
  • A lifetime mortgage will reduce any inheritance they leave from the property
  • There may be cheaper ways for Geoff and Jane to borrow money

This example is for illustration purposes, if you’d like to learn more or discuss your own situation in complete confidence and with no obligation, please call us on 0118 4668712 or send us an enquiry via email to info@themoneyguardian.co.uk

Equity release may involve a lifetime mortgage which is secured against your property or a home reversion plan which requires the sale of property for a discounted price. To understand the features and risks, ask for a personalised illustration.

The Money Guardian Ltd (FCA 797161) is an Appointed Representative of New Leaf Distribution Ltd which is Authorised and regulated by the Financial Conduct Authority. Number 460421.