Frequently Asked Questions

Below is a selection of our most frequently asked questions, if your query is not answered please contact us.

What is equity release?

Equity release is a method of releasing the equity that has built up in your property without having to sell your home. There are two main types, ‘Lifetime Mortgages’ which allow you to borrow against the value of your home or Home Reversion Schemes which allow you to sell all or part of it in exchange for a lump sum or a regular monthly income. Some plans give you the option to "draw down" further amounts of cash (equity) at a later date, based on your requirements.

Am I eligible for equity release?

To be eligible for equity release:

  • You must be aged 55 and over (age of youngest applicant if a couple)
  • Own your own home of standard construction in the UK
  • Your property is worth at least £70,000*

*Minimum age, property value and eligibility varies between product providers

Does the cash I release from my home get taxed?

The cash lump sum released from your home is tax-free. However, if you decide to place this money in a savings account, secure a regular income, or make an investment, tax may then be payable on any interest, income or gains you receive. Please note that the Richard James Partnership does not currently provide investment advice.

If I take out an equity release scheme, do I risk losing my house?

No. With a lifetime mortgage, the amount of money you borrow against the value of your home, plus any rolled-up interest, can never go above the value of the property - when it is sold at the end of your plan - due to the No Negative Equity Guarantee safeguard upheld by Equity Release Council. You will also continue to benefit from any rises in property value in the years to come.

With a home reversion scheme, however, although you can never have negative equity, as you actually sell a percentage of your home (for example 50%), then 50% of any rises in house prices will benefit the lender. If you were to sell 100% of your home on a reversion basis then the lender will benefit from all the property growth.

Can I end up owing more than the value of my home?

Most lifetime mortgages carry a ‘no negative equity guarantee’ and, although the loan is secured against your home, it means that you’ll never owe more than your home is worth. With a lifetime mortgage, although there are usually no regular payments to make and nothing to pay back until the end of the plan, the amount you owe will continue to grow. Interest is applied on the amount borrowed and on the interest already accrued over the long-term.

The Richard James Partnership Ltd only recommends lifetime mortgage products that will never let you or your estate owe more than the value of your house.

How much can I release?

The amount you are able to release will depend on:

  • Your age
  • Your home's value
  • Your current Health and Lifestyle

Some medical conditions could mean that you qualify for an enhanced lifetime mortgage, which could mean you can release more money from your home. There are also other things that will affect the amount you can release, such as whether you want a joint plan with a spouse or partner, or whether you want to leave an inheritance.

Can I do what I want with the money?

Yes, you can spend the money on almost anything you want – a holiday of a lifetime, giving gifts to family, securing a regular income, it’s up to you.

Can I release equity from my home if I have not yet paid off my mortgage?

If you still have an outstanding mortgage on your property you will need to pay it off in full, either by using some of the proceeds from the equity you release or from other funds. Once that is done, the rest of the money you release can be spent as you wish.

Are there alternatives to an equity release plan?

Yes, there are alternatives. For example you could:

  • Move to a smaller home
  • Move to a cheaper area
  • Take out a loan or traditional mortgage
  • Stay in work for longer
  • Make sure you receive all the state benefits that you’re entitled to
  • Rent out a spare room
  • Obtain assistance from family

You should consider all of your options carefully and seek specialist advice to ensure that you choose the best option for you.

If I take out an equity release plan, will I be able to move to another property?

Yes. Equity release plans which comply with our full product standards give you the right to move to a "suitable alternative property". This means a property which your provider would accept if it were setting up a plan for a new customer. There are some properties which providers would not be able to accept - and this is usually because there would be restrictions on their ability to sell the property in the open market when your plan comes to an end. So, for instance, homes which are built in retirement complexes are not generally acceptable, because the provider would not be able to sell them in the open market.

Would my partner have to move when I die?

Normally, where the borrower has a spouse or partner, the product is taken out in joint names from the outset to make sure that both individuals have the right to remain in the property until they die or move out.

If the product is taken out in your name only, then unless the mortgage can be repaid in full, the property will have to be sold and your partner find somewhere else to live.

If you marry after you’ve taken out equity release, or if someone comes to live with you as your partner, you need to tell your provider. It may not be possible to add your new spouse or partner to your existing equity release product. In this case they may not have the right to continue living in your property if you die or move into permanent long-term care.

What happens if I have to go into care?

It depends on the plan you choose and if it is in joint names or just one name. If the plan is in your sole name and you have to move into permanent residential long-term care, your home would have to be sold and the amount you released, plus the interest accrued must be repaid. If it is in joint names and only one of you moves into permanent long-term care then the other home owner has the right to remain living in the home.

Can I leave an inheritance?

Yes. You can leave an inheritance and release equity from your home. There are two types of equity release plan, and you have the option of leaving an inheritance on both:

  • Lifetime Mortgages are secured against your home and may offer the option of an Inheritance Protection Guarantee which allows you to preserve a portion of your home’s value as an inheritance
  • Home Reversion Plans work by you selling part, or all of your home. So, by selling part of your home, the remainder can be used to provide an inheritance for your loved ones.

It’s important that you involve anybody who you’d like to leave an inheritance to when arranging an equity release plan.

The Richard James Partnership Ltd actively encourages you to have close family or friends present at consultations to make sure everybody with a vested interest is aware of how equity release will affect any inheritance you wish to leave. Although you can still leave a legacy to your loved ones, equity release will reduce the value of your estate. This service only offers lifetime mortgages, and does not cover home reversion plans.

What about if I don’t need all of the money right now?

Some lifetime mortgage providers offer what is known as a ‘drawdown’ option. This means that you only release the money you need from your home, when you need it. The advantage of this is that interest is only charged on the amount you release. Remember, a lifetime mortgage is secured against your home.

Are there any fees to pay?

Yes. There will generally be advice and arrangement fees, legal fees and valuation fees. While some of these may be able to be added to the amount you release, others may have to be paid upfront.

Remember that by adding fees to the amount of equity you release, the greater the proportion of your home that will be owed to the plan provider (or the less money you will be able to release).

Does equity release mean that I’m renting my home?

No. with both types of equity release, you remain responsible for insuring the property and maintaining it, even if you take out a home reversion plan and sell 100% of your property.

What are the risks of an equity release plan?

There are different risks depending on the plan that you take. Look at the advantages verses the disadvantages section of our website for more information.

What happens if I die soon after taking out an equity release?

This will depend on the type of plan that you take out:

  • Home Reversion Plan - Your home will be sold, with the percentage that you agreed to sell to the provider being repaid. These plans work by the provider buying its stake at under market value, so if you die in the early years it could end up that you sold part, or your whole home, cheaply
  • Lifetime mortgage - Your home will be sold, with the amount you borrowed plus any interest being repaid to the lifetime mortgage provider. If you die soon after you take out your plan you won’t have accrued much interest, so the amount repaid will be close to the amount you originally released. Although a lifetime mortgage is secured against your home, there are no negative equity promises with all lenders that you will not owe more than the value of you

Terms and Conditions

Our charges are based on two considerations: the loan amount and the complexity of your individual circumstances. We will provide you with a free initial consultation and we will always explain what you will be charged before you decide to proceed with an application. As we offer a bespoke service our fees can vary. We charge an application fee of £395.00. This fee is only charged once your mortgage has been agreed in principle with the lender. Once your mortgage is completed we charge a broker fee of £995.00. If your circumstances are more complex, we may charge a higher fee. Our maximum fee is 1.5% of the loan value.

These fees apply to regulated mortgages. Certain mortgages, primarily most buy to let and commercial mortgages, are not regulated. Fees for non-regulated mortgages can vary depending on your requirements and circumstances.

Legal

Craig Spark is a Registered Individual with Richard James Partnership Ltd.

Richard James Partnership Ltd is authorised and regulated by the Financial Conduct Authority, FCA Number 301173. The Financial Conduct Authority does not regulate some investment mortgage contracts. Calls may be recorded for training and compliance purposes.

Richard James Partnership Ltd is a company registered in England, registration number 04427489, whose registered office is at 8 St. James’s Square, London, SW1Y 4JU.

Your property may be repossessed if you do not keep up repayments on your mortgage.

This is a Lifetime mortgage or home reversion plan, to understand the features and risks, ask for a personalised illustration.

Under no circumstances should any of the information contained within this website be construed as "advice". You should seek professional advice in respect of your own circumstances.