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Is equity release a good idea?

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Equity release could be a good option if you’re a homeowner looking for extra money. It gives you access to cash tied up in your home without having to move. The money you get when releasing equity is tax free and only repaid once you die or move into care.

But is equity release a good idea for you? To help you decide, here’s a quick, easy to read overview on releasing equity from your home.

So what is equity release?

Equity release lets you unlock the cash tied up in your home. The equity in your home is the market value of your property, minus any loans secured against it. The equity released can be paid in one lump sum, smaller payments as required or a combination of the two.

What is equity release explained in more detail

What can I use the money for?

The money you receive through equity release can be used however you wish:

  • Make home and garden improvements like a new kitchen or conservatory
  • A new car of luxury holiday
  • Help family get on the property ladder
  • Future proof the home for later life
  • Boost your retirement income

How does it work?

When you release equity, a loan is secured against the value of your home, known as a lifetime mortgage. The loan and the interest are only paid back once you die or move into long term care and your property is sold. This means there are no monthly repayments.

You can also release equity through a home reversion plan however this method of releasing equity isn’t as popular as it involves selling part or all of your home.

How  does equity release work explained

Is it safe?

Equity release is safe as it’s regulated by the Financial Conduct Authority. In addition most lenders are members of the Equity Release Council which has strict rules that further protect customers.

More details on how safe equity release is

Pros and cons

Having access to tax free cash can be a great benefit, especially when approaching retirement however equity release does have its considerations. For example because the loan is only repaid once the property is sold, it will affect any inheritance you wish to leave to family.

Our in depth guide on the pros and cons of releasing equity from your home will help you decide if it’s a good idea for you.

To be eligible for equity release you, or the youngest home owner must be 55 or older. You should own your home however you can release equity if you have an existing mortgage.

Your property must be your main residence, located in the UK or Northern Ireland and worth at least £70,000.

Pros and cons guide

How much cash can I get?

The amount of equity you’re allowed to release will depend on your age and the value of your home. The loan provider will consider how many years it will be before the loan is paid off, which is why older homeowners can usually release a higher percentage of equity.

Find  out how much cash could you release from your home

So is releasing equity a good idea?

Equity release could be a good idea if you want to boost your income, especially in your retirement years. Do seek independent advice before going ahead though and review any alternatives to equity release that may suit you be better.

Most importantly talk it through with family to see if they think it’s a good or bad idea. It will after all affect them so it’s good to include their thoughts in your decision making.

Why use us?

Simply Equity Release are experts in releasing equity, helping homeowners throughout the UK. We work in association with market leading equity release specialist Age Partnership; are authorised by the Financial Conduct Authority and members of the Equity Release Council.

The information we provide is clear, honest and independent.

Next steps

For more information on releasing equity, read our ‘equity release explained’ guide

Or to see how much money you can release, use our free equity release calculator

Free equity release calculator

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