A way to manage your later life finances
What is Equity Release?
Equity release enables homeowners over 55 to release tax-free cash from their home with a lifetime mortgage. How much you can release depends on both your age and the appraised value of your home. Your 'equity' is therefore the current value of your home, minus any mortgage or loan secured against it. Equity release lets you access this as a lump sum, or a series of lump sums, known as a drawdown plan. On both plans, you can make optional monthly repayments to manage the compound interest, however, you aren't obligated to do so.
You don’t have to move out of your home, and you'll receive a no negative equity guarantee, meaning you’ll never owe more than the value of your home when it's sold.
Types of equity release
There are two main types of equity release products – a lifetime mortgage and a home reversion plan. With both, you can stay living in your own home for the rest of your life, or until you move into long-term care. Please note, Pure Retirement is a specialist lender focusing on lifetime mortgages only.
Home reversion plan
This involves you selling some or all of your home, in return for a cash lump sum. You can stay there for as long as you live, without paying rent, but your home will be owned by the lender.
Lifetime mortgages
This is the most common type of equity release option. It's a long-term loan secured against your property, where you continue to own your home while borrowing money secured against it. Whatever you borrow will usually be repaid at the time of your death or if you move into long-term care.
What are the different types of lifetime mortgages?
Lump sum
You can take a single sum of tax-free cash. There are no regular payments, but compound interest is added to the loan.
Drawdown
You agree the total sum you can borrow with your adviser and after you've released an initial amount, you leave the rest in an interest free reserve and release it as you need it.
Am I eligible?
There are a number of criteria you need to meet to be able to access equity release – these may differ by product. If you can say yes to the following, you may be eligible for one of our lifetime mortgages:
- You're 55 or over (for a joint application, you both need to be over 55)
- You own a home in the UK that's worth £75,000 or more
- You want to borrow at least £15,000
- Your home must be your permanent and primary residence, and it should not remain unoccupied for more than six months at a time
What can equity release be used for?
Many people release equity for retirement, to help boost their income. But you can use the cash you release for a wide range of things, such as:
Managing your everyday expenses and monthly bills
Paying off your existing mortgage or debts
A luxury holiday or visiting family abroad
Gifting money to loved ones to help them with a mortgage deposit
Home improvements like a new kitchen, energy-efficient heating, or new windows
Buy a new car or the luxury one you've always dreamed of
Equity release pros and cons
Lifetime mortgages are only available through a qualified equity release adviser, who will go through the pros and cons with you. All equity release providers are regulated by the Financial Conduct Authority (FCA). Additionally, the Equity Release Council (ERC), of which we are a member, sets safeguards and standards for lifetime mortgages.
The advantages of equity release are:
- The cash you release is tax-free
- You can stay in your home – you don't have to downsize or move to a cheaper area
- Your loan won't be repaid until you move into long-term care or at the time of your death
- Unless you choose to, your loan doesn't need repaying until you die or move into long-term care
- You'll get a no negative equity guarantee, so you’ll never owe more than the value of your home when it's sold
- Flexible repayment options mean you can repay some of your loan early if you wish
- You can take equity release and move house, subject to your lender's approval
The disadvantages of equity release to consider are:
- Lifetime mortgages have compound interest which is calculated daily and will be added to your loan each month – so the amount you owe increases over time
- If you decide to pay off your lifetime mortgage early, there may be Early Repayment Charges (ERCs)
- A lifetime mortgage will reduce the inheritance you leave behind
- It may affect your state benefits and care provisions, so be sure to ask for professional advice
- If you give some of the cash to family, they may have to pay inheritance tax in the future
Our reviews
What our customers say
We pride ourselves on our excellent level of customer care. Read how our team have helped customers with their lifetime mortgages
Equity release alternatives
It's important to remember that equity release loans are long-term financial commitments. The loan will usually be repaid at the time of your death or if you move into long-term care. There are alternative ways to raise cash that you should consider alongside or instead of equity release:
- You could downsize or move to a cheaper property
- You could extend your mortgage term if you haven't paid off your mortgage
- You could stay in, or return, to work
- Home improvement grants can help with upgrades
- Taking in a lodger could be a way to raise extra funds
If you're thinking about equity release, please note that other forms of finance should be considered.
Find out more about equity release
For questions about equity release or a personalised illustration for a Pure Retirement lifetime mortgage, it's vital that you speak to an independent, regulated, and qualified equity release adviser. In the meantime, you can learn more with our online resources.
