Our Guide to Your Age and Equity Release

Equity Tree Equity Release and Age
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Equity release lets you access the money tied up in your home without having to move.

It’s available to people approaching retirement and can be withdrawn tax-free as either a lump sum or as a stream of smaller payments, known as a ‘drawdown’.

How Old Do I Need to Be to Release Equity on My Home?

You need to be at least 55 years old to apply for equity release in the UK. If you are planning to make a joint application, this applies to both of you.

From 55, you an apply the most common type of equity release, known as a ‘lifetime mortgage’.

Under a lifetime mortgage, you borrow money against the value of your home. Normally, you don’t make any repayments on the money borrowed, so the loan and its interest is repaid through the sale of your home when you die or move into long-term care.

There is also a second form of equity release, known as a home reversion plan, although these account for just 1% of the equity release market. To apply for one, you must be at least 65 years old.

With a home reversion plan, you sell a share of your home at below-market value to your lender, provides you with equity in exchange, while  you continue to live in your home as normal.

When you die or move into long-term care, the lender recoups the investment on their share through the sale of your home.

How Does Age Affect How Much Equity I Can Get?

The amount you can borrow is affected by your age, and various other factors (read more about these below). Although you can apply for equity release from the age of 55, the average age for equity release is 67 years old, for a lump sum payment, and 71 years old for a drawdown plan.

As a rule of thumb, the older you are when you apply for equity release, the more you will be able to borrow. Certain chronic medical conditions may also increase amount you can borrow.

AgeTotal Wealth ReleasedYour equity after clearing £15,000 mortgage
55£54,000£39,000
60£70,000£55,000
65£80,000£65,000
70£90,000£75,000
75£100,000£85,000
80£110,000£95,000
85£116,000£101,000
Source: Stepchange.org Equity Release Calculator. 28th May 2020. This is not a guarantee of how much you can borrow, as your options may be affected by your individual circumstances.

Equity Release: How Long Should I Wait to Apply for Equity Release?

There is no one ‘right time’ to release equity on your property. The right time for you will depend on your personal wants and needs. What are you hoping to use your wealth for?

The reasons people decide to release equity are extremely varied: from a top-up to retirement income, a one-off splurge,  gifting loved ones an early inheritance or funding care costs, your personal goals will determine the best time for you to apply.

It might be a good idea to talk with a retirement advisor or equity specialist if you are not sure about when would be the best time for you to release equity on your home.

Equity Release: I Live With Younger Family Members, How Will This Affect My Application?

Living with younger family members should not stall your application, as only the homeowner needs to be over 55.

However, equity release will have consequences for anyone co-habiting with you at the end of the loan term. Any family members or lodgers who reside with you won’t have the right to live in the property after you die or move in to long-term care.

Some lenders will ask them to sign a legal document acknowledging this. Even if your lender does not require a signed waiver, it is important to discuss your equity release plans with any cohabitants so that they understand the implications for them.

Equity Release: Is Age the Only Criteria?

Your age is just one of the things which a lender will look at when they decide whether to offer you equity release and how much to give you. There are other things that can affect your application too.

  • Your mortgage is a factor. To apply for equity release you either need to have paid off your mortgage or plan to use the equity to pay off your remaining balance.
  • The value of your home. To be considered for equity release, your home should be worth at least £70,000
  • If you live in a ‘non-standard’ home, you might struggle to release equity. You can ask your lender for more details about what they consider to be ‘non-standard’, but this likely to include mobile homes, houseboats, hotels and working farms.
  • If your home is in a high rise building run by a local authority or housing association, you may not be able to release equity. You may need to check with lenders.

How Can Equity Tree Help?

Here at Equity Tree, we have partnered with some of the UK’s leading Equity Release broker companies.

They have already helped thousands of people release equity already, and they can do the same for you.

Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these equity release companies, click on the below and answer the questions.

Len Burgess
Len Burgess
Len Burgess is a successful digital entrepreneur and founder of LBLK Publishing which specialises in Financial content. Len has been writing professionally on financial and business topics for 5 years before starting Equity Tree.
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