Equity release frequently asked questions

This will vary depending on your individual circumstances, your age, the value of your property and which type of equity release plan you apply for. Your equity release adviser will be able to give you a personalised illustration and talk you through the plan types that are available.  

The rate you pay will depend on the rate at the time you take the plan. Our lifetime mortgages are likely to have a higher interest rate than a standard mortgage because it is fixed for life, meaning that you have protection against any rate increase in the future.  

Yes, these are briefly explained below. However, your equity release adviser will be able to fully explain the costs involved and how they affect the plan.  
 
Initial loan valuation fee 
This covers the cost of valuing your property.   
 
Initial loan arrangement fee 
You can pay this up front at the application stage, or you can pay it on completion and add it to your loan. 
 
Your solicitor’s fees 
You should agree these with a solicitor of your choice. The arrangement fee covers our legal fees. We strongly recommend that you use the Equity Release Council website to find a solicitor who is familiar with equity release, as they will have the knowledge to ensure your application runs as smoothly as possible and you avoid unnecessary delays. 
 
Advice fee 
You may be charged a fee by your equity release adviser. This should be agreed at the outset. 
 
Pure Retirement may contribute towards the initial loan and arrangement fees, check your lifetime mortgage offer for more details.  
 

Whilst not a requirement, we do feel it is important to consider discussing your plans with your family. 

The good news is that any cash released from your home is tax-free. However, it is important that you discuss these matters with your equity release adviser, as depending on your personal circumstances, it could affect both. 

Yes, and you can continue to live in it until you or your partner, in the case of a joint application, pass away or need to move into long-term care. You will need to ensure that you maintain the property in a good condition. It’s also your responsibility to insure your home and pay all your property-related bills, such as gas, electric and council tax.  

Our lifetime mortgages are portable, which means that you will be able to move and take the plan with you if you so choose in the future. The new property would need to meet our lending criteria at the time and if it’s worth less than the current one you may need to pay back some of the loan and interest. There may also be additional legal and arrangement fees, as generally associated with moving house. 

Our lifetime mortgages have no repayments due throughout the period of the loan. Instead, interest is added to the amount owed each month and repaid when the loan is redeemed. Interest is charged at a fixed rate, applicable at the time of application, calculated daily and added to the loan each month on a compound basis. To understand the effects of this please refer to your equity release adviser.  

Additional borrowing may be available, subject to our lending criteria and interest rates at the time. Your property will also need a new valuation. There may be a cost associated with this service, this will be outlined in your lifetime mortgage documentation.  

Our lifetime mortgages are designed to last for the rest of your life. However, you are able to end the plan early by paying off the loan and the interest. There may be an early repayment charge for this. Your equity release adviser will be able to discuss this with you. 

A no negative equity guarantee is a feature that protects you and your estate. It means that when your property is sold after you and any other borrower have passed away or moved into long-term care, your estate will never have to pay back more than the sale proceeds of the property, even if the amount owed on the lifetime mortgage is higher as long as the terms of the mortgage are adhered to.

In other words, if your property sells for less than the outstanding mortgage balance, neither you nor your estate would be responsible for making up the difference.

This guarantee is a standard safeguard on lifetime mortgages that meet the standards of the Equity Release Council. Please note, it's important to remember that the amount you owe can increase over time because interest is added to the loan, which means there may be less value remaining in your estate when the property is eventually sold.

The loan will be repaid when your home is sold, usually following your death or your move into long-term care. In the case of joint-borrowers, this would be when the last surviving partner passes away or moves into long-term care. 
 
When repayment is due, the full amount must be repaid. This amount will be made up of the original loan amount plus any accrued interest. It may also include charges that have been applied to the loan e.g. arrangement fee and advice fee and any further borrowing you have taken. 
 
Any remaining equity in your home, after the loan has been repaid, will belong to you or your estate. 

By its very nature a lifetime mortgage will reduce the value you have in your home. Any money left in your property when it’s sold will belong to your estate. For more information about this, please seek specialist advice.  

If you go into long-term care then either you or your solicitor will sell the house. If you pass away, then this will be sold by the person looking after your estate.