Equity Release Mortgages
An equity release mortgage, also known as a lifetime mortgage, enables you to release money from your property without having to move home or sell. If you’re looking for trusted equity release advice in Berkshire or nearby, our specialist equity release brokers will help you explore your options.
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Specialist equity release advice with Simmonds Mortgage Services
Equity release is very different from a traditional mortgage. The products, lending criteria, long-term impact, and legal considerations all require specialist knowledge and careful planning.
That’s why many clients come to us looking for reassurance as much as advice.
For over 10 years, Simmonds Mortgage Services has been helping clients navigate complex and specialist mortgage situations with straightforward, honest advice.
From later-life lending and equity release to self-employed and specialist mortgage cases, we’re known for taking the time to properly understand your goals and finding solutions that genuinely work for you in the long term.
This is just one example of how we’re helping customers tailor their mortgage to their goals. For more first-hand experiences of successful mortgage solutions, see our 460+ glowing 5-star reviews.
Ready to explore your options? We make it straightforward and easy. Call Simmonds Mortgage Services today on 01184 693 037, use our contact form, or book a free call at a time that works for you.
What is equity release?
An equity release plan is a special type of mortgage that does not usually get repaid until the last remaining borrower dies or moves into long-term care.
The equity release lifetime mortgage is secured against your home and can release either a monthly income and/or one tax-free lump sum. It’s also possible to extract further equity from the value of your property at a later stage.
Most lenders offer equity release products to homeowners over 55.
At Simmonds Mortgage Services, we regularly help homeowners who are:
Looking to release money from their home in retirement
Looking to fund home improvements
Concerned about rising living costs
Reaching the end of an interest-only mortgage term
Exploring ways to support children or grandchildren financially
Interested in improving their lifestyle without downsizing
Purchasing a new property later in life
What happens to my existing mortgage?
If you still have an outstanding mortgage, all equity release providers will require it to be repaid as part of the process. This is very common, and in fact, many clients use equity release specifically to clear an interest-only mortgage that’s reaching the end of its term or to remove the pressure of monthly repayments in retirement.
The existing mortgage balance is usually repaid directly from the equity release funds, and any remaining funds are then transferred to your bank account for you to use as needed.
How does an equity release work?
In later life, you might find yourself to be “asset-rich but cash poor”. In simple terms, this means you may own a valuable home but not enough accessible money to enjoy a comfortable retirement (whatever that may look like to you). Equity release can help turn some of that home equity into usable funds.
You can obtain an equity release mortgage from lifetime mortgage providers who review your current financial circumstances, including your pensions and any means tested state benefits. Lending is typically based on your age versus the value of your property rather than a typical affordability based model.
We understand it can get overwhelming, which is why you can rest assured that at Simmonds Mortgage Services, we’ll explain exactly how equity release works and walk you through every possible solution before you even have to think about making any decisions.
How much equity would you need to get an equity release product?
To be accepted for an equity release mortgage, you need to be at least 55 and have a healthy amount of equity built up in your home. You certainly won’t need 100% equity to qualify, but you will need enough to repay any existing debts. Most UK lenders offer between 0% to 60% of the market value of your home, but this can vary depending on your age and property type.
Simmonds Mortgage Services can help you understand how much equity you could release with personalised illustrations based on:
Your age
Your property’s market value
Your property’s condition and construction type
Whether you have an existing mortgage
The type of equity release product that would suit you
In general, the older you are, the more equity you can usually release.
What types of equity release plans exist?
There are three main types of equity release that allow you to receive tax-free cash from your property, so you have more money to live on after you’ve stopped working. Some schemes also provide monthly payments, which can help you pay your regular bills.
Lifetime Mortgages
A lifetime mortgage is a loan secured against your home while you retain ownership. You can make optional repayments, or you can let the interest roll up. The loan amount and any built-up interest are paid back out of the sale proceeds when you die or move into long-term care. You may be able to ring-fence part of the property as an inheritance for your family. Be aware that when interest rates are high, a lifetime mortgage where the interest rolls up can turn into a significant debt. However, modern Lifetime Mortgages allow you to service interest each month, so the debt does not roll up.
Advantages of a lifetime mortgage
Age is not a barrier – Many standard loan providers won’t lend to people near retirement age or in retirement, but a lifetime mortgage can provide a solution.
No monthly payments – you can choose whether or not to make regular payments to pay back some of the loan. If you can pay the interest each year then no debt will roll up and compound. You can also repay capital if required, to reduce the debt.
Not based on income or affordability – lending is based on your age versus the value of the property.
Can be used to purchase a property – if you do not meet standard affordability rules or do not want to make interest payments, an equity release plan for a purchase may be suitable.
Can be used to repay an Interest Only Mortgage at the end of its term – if you are coming to the end of your term and do not have the means to repay the loan, or do not want to downsize, then a lifetime mortgage may be a good option to consider.
Disadvantages of a drawdown mortgage
Reduced inheritance – your family won’t get the full value of your property.
Means tested benefits may be impacted – you might not qualify due to the loan.
Fees can be significant – there is a cost of setting up the mortgage.
Early repayment charges – if you want to exit the agreement, early repayment fees can be high.
Interest charges – these can increase the debt quickly.
Drawdown scheme
A drawdown lifetime mortgage offers a more flexible option than simply one lump sum. Drawdown equity release products usually offer smaller lump sums initially, with a facility to drawdown additional amounts when required.
This means you have a pre-agreed facility, but you only pay or incur interest once you draw from your facility in the future.
Advantages of a drawdown mortgage
Reduced interest charges – you’ll only pay interest when you draw down from your reserve. While funds are still in the reserve, no interest is added. This saves a lot of money in the long run.
More money left to inherit – your family can keep more of their inheritance because interest charges are lower.
Means-tested benefits are impacted less – because you have more control over when you take additional funds, you can arrange your finances so there’s less of an impact on your benefits.
Disadvantages of a drawdown mortgage
Higher interest rates – other types of lifetime mortgages may have slightly lower interest rates.
Drawdown limits – you may be limited by the number of withdrawals you can make per year.
Early repayment charges – if you want to exit the agreement early, charges can be significant. However, these are often fixed and sometimes drop off after 8 to 10 years.
Home reversion plan
With this type of equity release scheme, the provider will purchase all or part of your home in return for a lump sum or regular payments. You will be able to continue to live in the property until you die. If you wish to retain part of your property value to pass on as an inheritance, you can choose to sell only a percentage of your home.
Advantages of home reversion plans
Retained homeownership – you remain the legal owner of your property.
No debt building up – there is no interest to pay, so you do not have a big debt at the end of the agreement.
Flexibility – you can take an initial amount, a monthly income, or a combination of both.
Access more equity – this scheme offers you the option to sell up to 100% of your property in exchange for cash.
Disadvantages of home reversion plans
Age-limited – usually only available to those over 65.
Slower and more difficult to arrange – providers can be more selective about who they will deal with.
Reduced estate value – depending on how much of your property you sell, the remaining inheritance could be much smaller.
State benefits affected – it is common for this type of scheme to reduce your eligibility for some state benefits.
Talk to an equity release specialist
We’ll help you figure out if equity release is right for you. We’ll discuss which products are best for your needs, how much equity you could release, and what the long-term outlook is. We’ll also talk through alternative options, such as downsizing, remortgaging, or retirement interest-only mortgages, so you can make a fully informed decision.
Looking for clear, honest advice about equity release mortgages? Contact Simmonds Mortgage Services today. Call us directly on 01184 693 037 or book a call at a time that suits you.
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Frequently Asked Questions on Equity Release
What is the difference between an equity release and a lifetime mortgage?
There is really no difference between an equity release and a lifetime mortgage - these are two terms for the same product, which provides homeowners with a tax-free initial lump sum and/or a monthly income using a loan secured against your property.
Can I remortgage a lifetime mortgage?
Yes, it is possible to remortgage a lifetime mortgage. We'll help you swap to a better deal or explore your options if your needs change.
Is the interest rate on a lifetime mortgage fixed?
Most lifetime mortgages have a fixed interest rate that doesn't change over the life of the loan. This can help you see how the interest will build over time.
Can I pay back a lifetime mortgage?
While it is usually possible to pay back a lifetime mortgage, be aware that you may incur an early repayment charge. We can help you understand the financial impact of doing this and advise you on the best step going forward.
Is there a minimum age for getting a loan to release equity?
Many lenders will consider you for an equity release plan once you are over 55.
What is a 'no negative equity guarantee'?
A no negative equity guarantee protects you and your loved ones from paying more than you owe. It means that you or your family will never owe more than the value of your home when it's sold.
Will my means tested benefits be affected by releasing equity in my home?
Potentially, yes. Releasing cash could affect some of your benefits, such as pension credits or council tax reductions, which is why we always assess every possible angle when deciding which mortgage product is right for you.
What's the cost of releasing equity from my property?
Fees can be between £1,500 and £3,000, so it's vital to factor that into your calculations when you're deciding on the best way forward. These would include legal fees, lender fees, which can often be added to the loan, and a broker fee. You may also need separate independent legal advice.
What guarantees are there that equity release is safe?
Recently, the Equity Release Council and the FCA reviewed equity release plans to ensure these types of products are not financially disadvantageous to individuals in later life. We only work with trusted, regulated providers to ensure you are fully protected when taking equity.
Where can I find an equity release calculator?
Each equity release service provider has their own way of calculating how much you can borrow. If you're unsure, a quick call with our financial advisers can help you get a good idea of how much equity you could release.
Are there specific equity release lenders?
Yes, we work with numerous UK lenders who are members of the Equity Release Council and committed to operating in line with safety standards. Some notable lenders include Aviva (offering both cash lump sum and drawdown mortgages), Legal & General (well-known and specialising in lifetime mortgages), More2Life (offering higher borrowing limits), and many more.
Looking for a different mortgage product? See our mortgage service for Houses in Multiple Occupation
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