Am I eligible for equity release?

Equity release is where you take a cash lump sum out of your home to boost your retirement income, clear an existing mortgage, help out family or pay off more expensive debts. It can be helpful in a number of circumstances but is not something to be taken lightly and won’t be suitable for everyone.

There are a number of eligibility requirements to be able to access equity release. Some of these will vary from provider to provider but here are some of the most common requirements to access equity release.

Age criteria for equity release

You will need to be aged over 55 to release equity from your home. If you own the property with someone else, then the youngest homeowner also needs to be aged over 55 if you want to apply for a lifetime mortgage. This typically rises to 60 or 65 for a home reversion plan.

Theoretically, if you are a couple looking for equity release and only one of you is over the minimum age, you could remove the younger homeowner from the deeds to access an equity release product, but this would have significant negative consequences for that homeowner so is rarely a sensible thing to do. If your partner asks if you will remove your name from the deeds to enable this, think extremely carefully before doing so and we would strongly recommend you seek independent legal advice in the first instance.

If you want to take out an equity release plan jointly as a couple (for example if you are married, cohabiting or in a civil partnership) then again, you must both be aged over 55. This has an extra benefit in that your joint applicant will then have the right to live in the property for as long as they want, should you pass away or move into long-term care.

The percentage of your property you can borrow also depends on your age. For example, the older you are when you take out an equity release plan, the more you can borrow. At 65, you can normally borrow in the region of 25% however if you’re older, you may be able to borrow as much as 50% or 60%

If you are under 55, you may still be able to take out a retirement interest-only mortgage but this will depend on the lender. A retirement interest-only mortgage is where the loan only gets repaid when you die or sell your house, but you do need to continue making monthly interest payments on the outstanding balance. You can read more about how retirement interest-only mortgages work here.

Minimum equity release loan amounts

There are also minimum loan amounts, for example, most lenders won’t let you access equity release for less than £10,000, with some lenders having an even higher minimum lending amount.

Looking for equity release help?

We’ve partnered with Key Advice Group, a member of the Equity Release Council, who have an “excellent” customer service rating on Trustpilot. If you are interested in a free, no obligation conversation with one of their equity release specialists to see what type of equity release product might be suitable for you, you can request a free callback here.

Your home and property

Location

Your home will need to be in the UK and you must be living in the home that you would like to release equity from, so you cannot release equity from a property you let out, or that is a second home. Unfortunately, as with regular mortgages, some lenders choose not to offer equity release on properties in Northern Ireland, the Channel Islands or the Isle of Man.

Minimum property value

Most lenders will expect your home to have a minimum property value of £70,000 although this can be higher to access the best deals from some lenders.

Construction

Most lenders will require your home to be of standard brick construction, and in a good state of repair. It also shouldn’t have been affected recently by flooding, subsidence, or other structural issues.

Freehold/leasehold

Equity release lenders typically prefer freehold properties but many will consider leasehold properties providing there is sufficient length left on the lease, for example 75 or 80 years.

Your financial circumstances

Most lenders will require you to repay any outstanding mortgages or other loans you have secured against the property with the proceeds from your equity release loan.

For plans where interest is added to the amount of the loan and repaid only when the house is sold, there is not normally an affordability check, as there are no monthly payments for you to ‘afford’.

Most lenders will therefore consider borrowers who have a poor credit history. They will still run a credit check to check for outstanding debts and may require these, and any CCJs and IVA amounts to be settled with the proceeds from your equity release loan before you receive the balance.

Whilst acceptance criteria is usually more flexible than it is with other forms of borrowing, it does vary widely from lender to lender and will depend on your specific circumstances.

If you are worried about your credit history, you can check your credit score for free with a number of providers. MoneySuperMarket’s Credit Monitor tool enables you to check your credit score and report free of charge using data from TransUnion. ClearScore is another free credit checking service that accesses Equifax data.

Getting help and advice on equity release

If you have specific questions about your circumstances and whether you will qualify for equity release you will need to speak to a financial advisor who can understand your circumstances, let you know if it’s suitable for you and recommend a specific product and lender for you. It’s vital that you use an advisor who is trained in equity release and who can recommend a suitable product from a member of the Equity Release Council (ERC), which is the trade body for the equity release sector. This ensures that the product will meet a number of minimum product standards designed to help safeguard borrowers.

If you’re looking for somewhere to start, Key Group is one of the more established providers who offer free advice on their range of equity release products. They are a member of the Equity Release Council and have an excellent customer service rating on Trustpilot. If you are interested in a free, no obligation conversation with one of Key’s equity release specialists to discuss your eligibility, you can request a free callback here.

If you’re looking for more information on equity release and how it works you can find more information in the following articles:

See how much wealth you could unlock from your home with this free, easy to use calculator. Fill in a few details to get an estimate – and if you’d like some advice, arrange to speak to an expert.

Links with an * by them are affiliate links which help Rest Less stay free to use as they can result in a payment or benefit to us. You can read more on how we make money here.

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