15 Most Common Questions About Releasing Equity From Your Home

Equity release is a way for homeowners, usually over the age of 55, to unlock the cash (equity) tied up in their property without having to sell or move out. The most common types are lifetime mortgages and home reversion plans. You do not need to prove your income with these plans and can still make repayments, or not, you choose!

A lifetime mortgage is the most popular form of equity release. It allows you to borrow money against the value of your home while still retaining ownership. The loan, plus any un-paid interest, is usually repaid when the last borrower dies or moves into long-term care. With these plans you can either have a one off lump sum, or a drawdown plan that allows for future access to funds.

A home reversion plan involves selling a part or all of your home to a provider in exchange for a lump sum or regular payments. You retain the right to live in the property rent-free until you pass away or move into care, but you no longer own the part you sold. We will not advise on these plans, as we consider them to be a very drastic course of action.

The amount you can release depends on several factors, including your age, any medical conditions, the value of your property, and the type of plan you choose. Typically, older homeowners and those with higher-value properties can release more.

With a lifetime mortgage, you retain full ownership of your home. With a home reversion plan, you sell a portion of your home to the provider, so you no longer own the full property.

No, one of the main benefits of equity release is that you can stay in your home for as long as you wish, provided it remains your primary residence.

With a lifetime mortgage, there are no required monthly payments. The interest on the loan can be added to the total amount owed, which is repaid when the property is sold. However, most plans allow you to make voluntary payments to reduce the balance. Some plans even reward you for doing this by offering a discount on the interest rate. With a home reversion plan, there are no payments at all.

Yes, you can use the funds from equity release to pay off your existing mortgage. In fact, any outstanding mortgage must be repaid either before or at the same time as taking out an equity release plan.

All equity release plans under the Equity Release Council standards come with a "no negative equity guarantee," which means you or your estate will never owe more than the value of your home when it is sold, even if house prices fall.

Equity release will reduce the value of your estate, and therefore, the inheritance you leave behind. The amount depends on how much equity you release, how long you live, and any interest that accrues on a lifetime mortgage.

Releasing equity could affect your eligibility for means-tested benefits such as Pension Credit or Council Tax Support, as the money you receive could be counted as income or capital. It’s important to get the right advice if you could be eligible for these benefits and we will always check to see if you are eligible and advise you accordingly.

Yes, with equity release plans, you can move house and take your plan with you, as long as the new property is acceptable to the provider. However, this might involve repaying some of the loan from the proceeds of the sale if the new property is of lower value.

There are several costs to consider, including arrangement fees, legal fees, valuation fees, and potential early repayment charges. These costs can vary depending on the provider and the type of plan you choose.

Equity release is regulated by the Financial Conduct Authority (FCA) in the UK, and providers who are members of the Equity Release Council follow strict rules to protect consumers. Viva are members of the Equity Release Council and work very hard within our remit to raise the standards for the whole industry. At the time of writing Viva has three of its team working with the Equity Release Council on projects.

While it is possible to repay a lifetime mortgage early, doing so can incur early repayment charges, which can sometimes be significant. Home reversion plans usually cannot be reversed. It’s important to understand these conditions before committing to an equity release plan.