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Equity Release — what you need to know

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Equity Release — what you need to know

Equity release allows homeowners aged 55 and over to access the value tied up in their property — without having to sell or move. Whether you want to boost retirement income, help family members onto the property ladder, or pay off an outstanding mortgage, equity release could be an option worth exploring. Promise Money is an FCA-regulated whole-of-market broker, searching the entire market to find the right solution for you.

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What is equity release?

Equity release is the collective name for financial products that allow homeowners aged 55 or over to unlock the cash value tied up in their property. You do not need to make monthly repayments on the most common products — instead, the loan plus accumulated interest is repaid when you die or move into long-term care, typically from the sale of the property. You remain the legal owner of your home throughout.

Lifetime mortgages and RIO mortgages

Lifetime mortgages are the most popular form of equity release. You borrow a lump sum or drawdown facility against your home. Interest is added to the loan each month, so the balance grows over time. A no-negative-equity guarantee means you will never owe more than your home is worth. Retirement Interest Only (RIO) mortgages work differently — you pay the interest each month, keeping the loan balance stable. The capital is only repaid when the property is sold. RIO suits borrowers who have a reliable pension income and want to avoid interest roll-up.

How much can you release?

The amount you can borrow depends on your age and the value of your property. As a general guide, borrowers in their mid-50s can typically release 20–25% of their property value, rising to 40–50% for those in their 70s and above. Health conditions and lifestyle factors can sometimes increase the amount available. Use our free equity release calculator for an indicative figure, or speak to one of our advisers for a personalised assessment.

What are the interest rates?

Equity release interest rates are fixed for life on most lifetime mortgages, giving you certainty over the long term. Because interest compounds monthly on a lifetime mortgage, the total amount you owe can grow significantly if no repayments are made. Your adviser will show you a full personalised Key Facts Illustration (KFI) before you make any commitment, so you can see exactly what the product will cost over different time periods.

Is equity release safe?

All products approved by the Equity Release Council must include: a no-negative-equity guarantee; the right to remain in your property for life; the right to move to a suitable alternative property; and a requirement that you receive independent specialist legal advice before completing. Promise Money advisers are fully qualified in equity release and regulated by the FCA (Ref: 681423).

Who can apply?

Most lifetime mortgage products require the youngest applicant to be at least 55 years old, though some lenders require 60. Both applicants on a joint application must meet the minimum age. The property must be your main residence, located in the UK, and worth at least £70,000 in most cases. Leasehold properties and properties of non-standard construction may have restricted options — your adviser will confirm eligibility.

Are there alternatives?

Equity release is not right for everyone, and a good adviser will always explore all options. Alternatives to consider include: downsizing to a smaller property; a Retirement Interest Only mortgage where you pay monthly interest; a standard remortgage if you have sufficient income; or using savings and existing investments. Releasing equity reduces the value of your estate and may affect entitlement to means-tested benefits — your adviser will cover all of this in their recommendation.

Promise Money is authorised and regulated by the Financial Conduct Authority (FCA Ref: 681423). Commission disclosure: We receive a commission from lenders on successful completion. This does not affect the rate or product you receive. Full details will be provided in your Key Facts Illustration (KFI) before you proceed.

For more in-depth guidance, explore The Equity Release 100 — expert answers to 100 common questions.

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    Promise Money is a broker not a lender. Therefore we offer lenders representing the whole of market for mortgages, secured loans, bridging finance, commercial mortgages and development finance. These loans are secured on property and subject to the borrowers status. We may receive commissions that will vary depending on the lender, product, or other permissable factors. The nature of any commission will be confirmed to you before you proceed.

    More than 50% of borrowers receive offers better than our representative examples

    The %APR rate you will be offered is dependent on your personal circumstances.

    Mortgages and Remortgages

    Representative example

    Borrow £270,000 over 300 months at 7.1% APRC representative at a fixed rate of 4.79% for 60 months at £1,539.39 per month and thereafter 240 instalments of £2050.55 at 8.49% or the lender’s current variable rate at the time. The total charge for credit is £317,807.66 which includes £2,500 advice / processing fees and £125 application fee. Total repayable £587,807.66

    Secured / Second Charge Loans

    Representative example

    Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55,730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.20

    Unsecured Loans

    Representative example

    Annual Interest Rate (fixed) is 49.7% p.a. with a Representative 49.7% APR, based on borrowing £5,000 and repaying this over 36 monthly repayments. Monthly repayment is £243.57 with a total amount repayable of £8,768.52 which includes the total interest repayable of £3,768.52.

    THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME

    REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

    Promise Money is a trading style of Promise Solutions Ltd – Company number 04822774
    Promise Solutions, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG

    Authorised and regulated by the Financial Conduct Authority – Number 681423
    The Financial Conduct Authority does not regulate some forms of commercial / buy-to-let mortgages

    Website www.promisemoney.co.uk