Your Free Equity Release Brochure

What To Expect Within Your Brochure

At Bower Home Finance, we’ve created a helpful equity release brochure that provides all of the facts and information needed to understand equity release and how it all works.  

Whether you are a looking to release some of the equity tied up in your home or already have an existing lifetime mortgage or equity release plan and are thinking about switching to a more competitive plan, we can help. 

This comprehensive equity release and mortgage brochure covers everything you need to know to help decide if equity release is right for you and whether it could be the key to a happy and fulfilling retirement. 

What Is Equity Release? 

Equity release can be a great way for homeowners to access some of the cash tied up in their property to spend as they wish; whether it’s paying off debt, home improvements, holidays or simply enjoying a comfortable retirement. 

However, sometimes all of the terminology, jargon and finance lingo can be confusing which makes it hard for people to understand exactly what equity release is and whether it is right for them. At Bower Home Finance, we have cut out all of the nonsense and created a simple, informative and easy to understand guide to equity release to help answer the key questions that you need answers to. 

Equity release is the term used for a ‘product’ which allows homeowners to release tax-free cash from the equity they’ve accumulated in their property without the hassle or stress of having to move. The ‘equity’ is based on the amount that the property could sell for, minus any mortgage or loans secured against it. 

Most equity release products offer different options for how the money is released including one lump sum, in a drawdown facility or a combination of the two. 

What Types Of Equity Release Are There? 

There are two main types of equity release – lifetime mortgages and home reversion plans. 

Lifetime mortgage 

A lifetime mortgage is the most common type of equity release, it is a loan secured against your home which allows you to borrow a lump sum of money. You still retain ownership and can continue to live in your home for as long as you wish.  

As the owner you remain responsible for the property including the upkeep, maintenance, repairs, utility bills and council tax etc. There is no need to make any monthly repayments, and the interest will compound as the amount you owe continuously increases.  

The loan secured against your home is then repaid from the sale of the property when the last remaining borrower passes away or moves into long-term care.  

Some lifetime mortgage plans may allow you to make voluntary repayments and move home, subject to lender criteria. However, early repayment charges may apply in certain circumstances. 

Home reversion plan 

Home reversion plans aren’t as popular as they used to be but do still occur.  

They work by the homeowner selling all or part of their home to a home reversion provider, but usually at somewhere between 20% and 60% less than its full market value.  

In exchange you’ll receive a tax free lump sum or regular payments that can be spent as you wish and you are entitled to remain in the home until you move into permanent residential care or pass away. Once this happens the property is sold and the proceeds split between the beneficiaries and the home reversion providers based on the percentages owned. 

Is equity release a good idea? 

There is no one size fits all with equity release, which is why the right financial adviser will take into consideration your personal circumstances and explain alternative options if equity release isn’t right for you.  

At Bower Home Finance, we offer independent, unbiased financial advice which means if we think some, or all, equity release products aren’t right for you, we will not recommend them. 

Our Equity Release Council membership 

As members of the Equity Release Council, our fully qualified advisers will only recommend equity release products that follow the Equity Release Council Standards.  

Some of these standards include:  

• The right to live rent-free in your property until you pass away or move into long-term care. This type of security is something that isn’t available with retirement interest-only mortgages (RIOs). 
• The “no negative equity” guarantee ensures that the amount you owe will not exceed the value of your property. 
• You must have the right to make penalty free payments, subject to lending criteria. 

Is equity release right for me? 

Equity release isn’t always going to be the perfect solution and whether equity release is right or not will depend on your personal situation.  

For those who the following applies to, equity release could be a good option; 

• If your current sources of income and savings are not going to be enough to meet your retirement needs. 
• You cannot or do not want to downsize. 
• You either have no beneficiaries or don’t mind reducing the amount of inheritance your family will receive. 
• An independent financial adviser has assessed your case and concluded that equity release is a good fit for your needs. 

What are the pros and cons of equity release? 

Understanding the pros and cons of equity release will help you move forward with confidence whilst offering insight into whether equity release is right for you. 

Advantages of equity release 

• You can receive either a tax-free lump sum or smaller, regular payments to spend as you wish. 
• You can retain ownership with a lifetime mortgage  
• You can continue to live in your home until the last borrower passes away or moves into full-time care. 
• Depending on the type of plan you could benefit from any rise in the value of the property. 
• Equity release is transferable which means that you can still move home in the future if you wish as long as the new home meets the suitability criteria. 

Disadvantages of equity release 

• The value of your estate is reduced which means that there will be less money left for the beneficiaries in your will. 
• If you opt for a home reversion plan, then the reversion company will own all or a share of your property. 
• When you receive a lump sum or extra cash to supplement your income then it can affect some means-tested benefits that you are entitled to now or in the future. 
• For those who receive care at home that is partially or fully funded by their local council, it can result in them having to charge you or require you to pay more. 

Who is eligible for equity release? 

In order to be eligible for equity release there are certain conditions that you must meet including; 

• For lifetime mortgages the individual or pair borrowing need to be at least 55 years of age. 

• With home reversion plans those borrowing jointly or individually need to be at least 65 years old. 

• The property you own must be in the UK and your main residence. 

• Your home must be over a certain value and in reasonable condition. With different lenders and plans there can also be restrictions on the type of property that is accepted. 

If you have an existing mortgage or secured loan on your property, then you could still qualify for equity release. However, this will depend on the value of your home and the total outstanding on the existing loan or mortgage as you will have to pay them off at the same time as taking equity release. 

For those who have dependents living with them then equity release may not be suitable but this can be clarified with independent legal advice. It might be that if the dependants want to continue to live in the property that they need sign a waiver verifying that they understand if the homeowners die or move into permanent residential care, that they no longer have the right to live there. 

How much can I release? 

The lender will look at a number of factors to help determine how much equity they can release such as; 

• The persons age 
• How much the property is worth 
• The state of the homeowners health 

The maximum amount of equity that can be released will depend on the factors listed above.  

As mentioned, some equity release plans are medically underwritten which means that you could access additional funds as well as obtain a lower interest rate, if you meet any of the lenders listed medical conditions or lifestyle factors. 

If you would like to find out how much tax free cash you could unlock from your home then try our free equity release calculator. 

Speak to an equity release adviser today 

If you are aged 55+ and are a UK homeowner, why not start your equity release journey today? 

At Bower Home Finance, our advisers are on hand to discuss your equity release options and help you take the next step in your equity release journey.  

See how much equity you could release from your home today using our free online equity release calculator.  

Is equity release safe? 

Equity release is a big decision, and you should consider it very carefully before you make anything official or sign any paperwork.  

As well as reading this guide to equity release, it is always recommended expert advice first so you can get the best advice, guidance and support surrounding what is the best option for your circumstances and how to proceed with the next steps. 

In addition to our guide, we’ve put together some information about the safeguards with equity release in addition to the pros and cons of equity release.  

If you are considering equity release, we strongly recommend that you read our equity release page carefully and talk to one of our specialists before deciding if you wish to proceed. 

To find out more about any of the products and the service we provide, please call us on freephone 0800 411 8668, request a call back, email us, or join our live chat you’ll find on our website. 

Please be aware that equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. All features and risks are thoroughly explained in your free personalised illustration. 

All equity release plans are regulated by the FCA that are called Lifetime Mortgages or Home Reversion Plans. Bower Home Finance is also regulated by the FCA to give Equity Release advice as stated on the FCA register under our firm registration number 451607.