Latest News

How to Release Equity in Your Home

11th September 2017

If you’ve ever heard people talking about their money being ‘tied up in their house’ then you already know what equity is. Equity refers to the value of a property after deducting any mortgage /secured loans. ‘Equity release’ is the umbrella term used to denote the range of products which enable over-55s to access the cash value of their home.

As with regular mortgages, a degree of ‘shopping around’ is advised before you settle on an option. At IMC, our highly experienced and knowledgeable advisors can help you to understand the benefits and drawbacks of releasing cash from your property.

In the meantime, this guide aims to shed some light on the seemingly daunting subject.

What are the equity release options?
In the UK, there are two options open to you should you wish to draw money from your home.

1. Lifetime mortgage
2. Home reversion

Lifetime mortgage
If the property in question is your main residence, you can take out a mortgage on the value while still retaining ownership.

What are the fundamentals?
• It is possible to ‘ring-fence’ some of the value of the property, meaning it is not included in the mortgage and remains ripe for inheritance.
• In most cases, no repayments are made while you are still alive. Interest accrues or ‘rolls up’ and is paid with the principal after your death.
• However, some lenders now offer the option of paying off some or all of the interest. This helps to limit the financial burden on your family.
• The minimum age for a lifetime mortgage is 55.
• The maximum percentage you can borrow is usually 60% of the value of the property. But your age and any past or present medical conditions will be taken into consideration when setting this figure.
• It depends on the lender whether you will receive the money in a lump sum or in regular amounts.
• You have the right to remain in your property for the duration of your life or until you are admitted into long-term care.
• Crucially, lifetime mortgages operate a ‘no negative equity’ guarantee. Put simply, when your property has been sold, and agents and solicitors fees have been paid, if there is not enough money left to cover the loan, your estate will not be liable to pay any more than what was available from the house.

Home reversion
In this instance, you can sell some or all of your home to a reversion provider, to obtain the cash. A reversion provider will then sell or redevelop your home upon your death.

What are the fundamentals?
• You can choose to sell just ‘some’ of your home, which effectively ‘ring-fences’ the rest for those who are due to inherit your property.
• You have the right to continue living in the property (rent-free) until you die or are admitted into care but you will need to pay any costs of maintenance and insurance.
• The minimum age for home reversion tends to be 60.
• You’ll normally get between 20% and 60% of the market value of the portion of the property that you sell.
• Like the lifetime mortgage, this product has a no ‘negative equity’ guarantee.

Equity release in many instances can prove to be more expensive than an ordinary mortgage – especially because you will be charged a higher rate of interest.

If you have any concerns about equity release and how it could affect your finances, talk to a member of the IMC team today.

Return to news page
Gold star Gold star Gold star Gold star Gold star
"We really like the people and services provided at IMC. We've been using them for 6 years and they are incredibly helpful and attentive. Really Great!"

Richard Curen , Nov 2018

Independent review from Google
Gold star Gold star Gold star Gold star Gold star
"Totally recommend
Excellent company to work with, Jacqueline Elliot has dealt with numerous mortgage reviews for us and always reminds us in plenty of time to renew and make the proceeds as easy as possible. Can not recommend highly enough."

LeighM-33 , Dec 2018

Independent review from Yell
Gold star Gold star Gold star Gold star Gold star
"Andrew Francis has just completed a re mortgage for me on a property I own in London. I live in Bournemouth so good communication is really important. Andrew and Jennie have been excellent during what was a protracted transaction due to the additional requirements from the lender and their appointed conveyance solicitors. Despite unhelpful delays by the lender , I felt IMC were always on hand to negotiate on my behalf and bring the transaction to as swift a close as possible. My cousin is an IFA who I'd naturally automatically go to for advice and products but he recommended I stick with IMC as he couldn't better the deal and lenders they had available. I normally begrudge paying a fee to an IFA when I know they will also be paid by the lender but to be fair in this case, they earnt it and some! Thanks guys. I'm now £600 pm better off for the next five years ! 👍🏻😁 Chris Amey."

Christopher Amey , Oct 2019

Independent review from Facebook
Gold star Gold star Gold star Gold star Gold star
"Our mortgage adviser Andrew Francis is brilliant. When we first met him we were first time buyers with very limited knowledge about the process of buying a first home in the UK. However, Andrew guided us through the process with his vast knowledge and professionalism. We had to recently re- mortgage our flat, Andrew got in touch with us well in advance he presented us with the best options for us and made the whole procedure painless. Of course, we were a lot more relaxed this time around, as we already knew that we are in good hands. Thank you for your help, Andrew!"

Vyara Panayotova , Feb 2020

Independent review from Google