What is Equity Release?

Equity Release, Lifetime Mortgages & Home Reversion Plan will reduce the value of your estate and can affect your eligibility for means tested benefits.

Equity release enables you to unlock the current value of your property in the form of a cash lump sum. It’s designed to offer property owners some financial freedom later in life.

The equity in your home is the value of your property less the outstanding mortgage. The total amount you are able to release from your property will depend upon its value and any outstanding mortgage you have.

For example, if your outstanding mortgage is at £50,000 and your property is worth £250,000, then your total equity would be £200,000.

An equity release broker works alongside you to review your circumstances and process the application quickly and smoothly, which is where our specialist Northampton-based mortgage advisors excel.

Interested in learning more about equity release and whether or not it’s right for you? Complete our contact form below to schedule your free initial consultation today with our expert equity release brokers Northampton.

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How Does Equity Release Work?

You have to be at least 55 years old to qualify for equity release. There are two main options available: a lifetime mortgage and a home reversion plan.

With both plans, you can choose to withdraw the money as a lump sum or in smaller amounts. You only have to pay interest on the amount you have borrowed. You can also choose to ring-fence some of the value of your property for inheritance.

You can remain in your property as long as it is your main residence and you follow the terms and conditions of your contract.

Just like with mortgages, you will need to do your research and get advice from an equity release broker to see whether it’s the right option for you, and if it is, which product will best suit your needs.

How Does a Lifetime Mortgage Work?

A lifetime mortgage allows you to take out a loan secured on your home. This does not need to be repaid until you die or go into long-term care, although you can choose to repay before then.

How Does Home Reversion Work?

Home reversion allows you to sell part or all of your home to a company in return for a lump sum or regular payments. These payments are usually between 20% - 60% of the market value.

While some or all of the property is no longer owned by you, you can continue living in the property, rent free, until you die. However, you have to agree to maintain and insure it and your property may be inspected from time to time.

When your property is sold, the sale proceeds are shared according to the remaining proportions of ownership.

Want to learn more? Call us or fill out a simple contact form to speak to our expert equity release brokers in Northampton.

What Can Equity Release Be Used For?

Equity release has an abundance of applications. It helps to free up cash in later life. It’s a popular option, and in 2022, the Equity Release Council reported over 90,000 new and returning customers choosing this mortgage product.

Popular reasons that homeowners look for an equity release plan include:

  • Traditionally, it’s been used to pay for home renovation projects, such as extensions and new driveways.
  • A more recent use includes paying for home energy improvements, particularly the installation of energy efficient windows, doors and insulation.
  • You can use this loan to help pay off debts, known as debt consolidation.
  • If you’ve got big plans - perhaps you want to go on a cruise around the world - you can use equity release to help fund your lifestyle and make the most of your retirement.
  • You can even buy a second home, so if that’s been on your mind, this is one option to consider to help fund a holiday home.
  • You can also support your family and loved ones with some of life’s big milestones, such as getting married or buying a first home.

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I found the company really helpful friendly and approachable. Rob was amazing very professional and friendly felt very at easy with him. Will definitely tell friends and family.
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Why Choose Us?

At Derngate Wealth Management Northampton, we work with a wide variety of clients to help them decide which mortgage, equity release or insurance plan is right for them. Shopping around yourself can be immensely time consuming, not to mention confusing; with so many options available, how do you know which one to choose?

We can do all that hard work for you, exploring a range of lenders to identify plans that would best meet your needs. Our experienced and highly qualified advisors will be on-hand to answer your questions in a jargon-free and easy to understand manner, helping you get to grips with everything in no time. 

And, once we’ve found you an equity release plan you’re happy to go ahead with, we can help you make the application and get it all sent off.

So, if you’re looking for friendly, local equity release brokers Northampton, that can provide sound advice on all things equity release, you’ve come to the right place. Ready to get started? Simply call us or send us an email today - we’re ready and waiting to help.

We can also discuss other ways you can make the most of your retirement savings, including advising on pension tax relief.

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Frequently Asked Questions

Do you need a mortgage broker for equity release?

It’s highly recommended that you seek professional advice from an equity release mortgage broker before signing your name on the dotted line and taking out a loan against the value of your property. A broker can make it easier to find the right loan and ultimately help you choose whether this is the right option for you.

How long does the process take?

The entire process can take between 8-12 weeks, however this can change depending on various factors. Keep this in mind when planning what you’d like to do with the cash.

Are the interest rates fixed or variable?

Interest rates are usually fixed. However, if they are variable then there will be a cap, which remains the same for the loan’s lifetime.

How does equity release compare to an ordinary mortgage?

Equity release interest rates are typically higher than an ordinary mortgage, which is something you will need to bear in mind when considering if it’s the right option for you.

What happens if I don’t pay back the loan in my lifetime, or I end up owing more than the home is worth?

Many people considering this will be concerned about what might happen if they don’t pay back the loan in their lifetime. When choosing a lifetime mortgage or home reversion plan, we recommend choosing one that offers a no-negative-equity guarantee. This means that when your property is sold, and agents’ and solicitors’ fees have been paid, neither you, your estate, nor your beneficiaries will be liable to pay any more, even if the amount left is not enough to repay the outstanding loan to your provider.

If you choose an equity release plan that doesn’t offer a no-negative-equity guarantee, then your beneficiaries will be liable to pay any extra costs above the value of your home.

Can I move to another property?

Yes, you can move to another property and take the lifetime mortgage with you. However, your new property will need to be accepted by your provider to check there is continued security for your equity release loan.

Is there a minimum amount of equity I can withdraw?

You will need to check with your equity provider if there is a minimum amount you can withdraw at a time.

Will equity release affect my Income Tax position or eligibility for benefits?

Equity release can affect your tax position and eligibility for welfare benefits. It’s important to read the terms and conditions of your product and consult an equity release mortgage broker in Northampton to see how this could affect you.

Are there any hidden costs?

Aside from the interest rates, you will also need to consider a number of other costs associated with equity release. These can include legal and valuation fees, buildings insurance, home maintenance costs, early repayment charges and any advisor fees. If you’re using a home reversion plan, you may also be liable to pay ground rent. You should take these extra costs into account when considering if you can afford equity release.