Equity Release

A professional who provides financial advice on equity release options, helping you choose the most suitable product for your needs.

The yearly interest rate charged on the amount you borrow, including any fees or additional costs, expressed as a percentage.

The minimum age at which you can qualify for an equity release product, typically starting at 55 years old.

A fee charged by the lender to cover the administration costs of setting up an equity release plan. This fee is usually deducted from the initial loan amount.

Any item of value owned by an individual, including property, which can be used to secure an equity release loan.

Formal confirmation from an equity release provider that they are willing to proceed with the loan application, subject to further checks and valuations.

An independent professional authorised by the equity release provider to assess the market value of your property.

A charge levied by the equity release provider for processing your application. This fee may cover costs such as credit checks and legal work.

Another term for a Lifetime Mortgage, where the loan is arranged based on the value of your home and repaid from its sale after death or moving into long-term care.

An individual or entity entitled to receive a portion of your estate after your death. Beneficiaries may be impacted by the reduced value of your estate due to equity release.

A fee charged by an intermediary or broker for arranging an equity release plan on your behalf. This fee is typically paid upfront or can be included in the loan amount.

A provision in the equity release agreement that allows the homeowner to repay the loan early, sometimes subject to early repayment charges.

Insurance that covers the structure of your home against risks such as fire, flood, or subsidence. It is a requirement for most equity release plans to ensure the property remains in good condition.

The obligation to provide evidence to support a claim or application. In equity release, this may involve proving ownership of the property and meeting eligibility criteria.

Insurance or guarantees provided to buyers, ensuring that they are protected in case of issues with the property title or other legal matters. While not directly related to equity release, it can be a consideration for those selling a portion of their home.

A feature in some equity release plans that allows the homeowner or their estate to repay the loan and regain full ownership of the property. This option is usually subject to specific terms and conditions.

Interest calculated on the initial principal and also on the accumulated interest of previous periods. For equity release, this means the amount you owe increases over time.

The amount of money you receive from an equity release plan, excluding any interest that accrues over time.

A feature of some drawdown lifetime mortgages that allows you to access funds as needed from a pre-agreed reserve, rather than taking a lump sum upfront.

The final stage of the equity release process when all legal documents are signed, and the funds are released to the homeowner.

Interest calculated on the initial principal and also on the accumulated interest from previous periods, leading to interest accruing on interest.

A specified time frame after signing an equity release agreement during which the homeowner can cancel the contract without incurring any penalties.

An assessment performed by equity release providers to evaluate the homeowner’s credit history and financial stability. Although not as stringent as for other types of loans, it can still impact eligibility.

An option within some lifetime mortgages that allows you to release equity in smaller, incremental amounts instead of a single lump sum.

A feature in some equity release plans that allows you to repay the loan without penalties if you move to a less expensive property, typically after a certain period.

An arrangement where repayment of the equity release loan is postponed until a later date, typically until the homeowner passes away or moves into long-term care.

The process of distributing the funds from an equity release plan to the homeowner, often in the form of a lump sum or through regular payments.

A temporary lower interest rate offered at the start of some equity release plans, which may increase after an initial period.

A feature in some equity release plans that allows you to repay the loan without early repayment charges if you move to a less expensive property, usually after a specified period.

An option within certain lifetime mortgages that enables homeowners to withdraw funds as needed from a pre-approved reserve, instead of taking a lump sum upfront.

A type of lifetime mortgage that allows you to take smaller amounts of money as needed from a pre-agreed cash reserve, reducing the amount of interest that accumulates.

A fee charged if you repay the equity release loan early, before the agreed upon term or triggering event (such as moving into long-term care or passing away).

A type of lifetime mortgage that offers better terms if you have certain health conditions or lifestyle factors that reduce life expectancy.

The difference between the market value of your home and the amount you owe on any outstanding mortgage or loans secured against it.

Financial products that allow homeowners aged 55 and over to release some of the equity tied up in their property without having to sell it.

A trade body representing the equity release sector, which sets standards and safeguards for equity release products and providers.

All the money, property, and other assets owned by an individual at the time of their death. Equity release can reduce the value of your estate, impacting the inheritance you leave.

The process of arranging the management and disposal of your estate during your life and after your death, which can be affected by equity release decisions.

A provision in an equity release agreement that excludes certain conditions or events from the terms of the contract, such as specific types of property damage or changes in property value.

The set of conditions that must be met to qualify for an equity release plan, including age, property type, and property value.

The regulatory body for financial services in the UK, ensuring that equity release providers and advisers adhere to strict standards.

A professional who provides advice on financial products, including equity release, helping you choose the most suitable plan for your needs and circumstances.

An interest rate that remains constant for the entire term of the equity release loan, providing predictability in the amount owed over time.

An option within some equity release plans that allows you to make voluntary payments towards the loan, helping to reduce the overall amount of interest accrued.

A type of home reversion plan where you sell the entire property to the provider in exchange for a lump sum or regular payments, while retaining the right to live in the home rent-free for life.

The disbursement of the equity release loan to the homeowner, which can be received as a lump sum, regular payments, or a combination of both.

The ability to access additional funds in the future from a pre-agreed cash reserve, available with some drawdown lifetime mortgages.

A feature in some equity release plans that allows you to ring-fence a portion of your property's value to ensure it is passed on to your beneficiaries.

A set period during which certain terms and conditions of the equity release plan, such as fixed interest rates or no early repayment charges, are guaranteed not to change.

The total amount of money you can borrow through an equity release plan before any fees, charges, or deductions are applied.

A regular payment made by the leaseholder to the freeholder as part of the lease agreement. For leasehold properties, equity release providers may consider the amount of ground rent when assessing eligibility.

An interest rate that is locked in and guaranteed not to change for a specified period, providing predictability in the amount of interest that will accrue on the loan.

A person appointed to manage the affairs of a homeowner who is no longer capable of doing so, particularly relevant in the context of equity release if the homeowner becomes incapacitated.

A type of equity release where you sell part or all of your home to a provider in exchange for a lump sum or regular payments, while retaining the right to live in the property rent-free for life.

Funds obtained through equity release specifically used for making improvements or modifications to your home, potentially increasing its value and your quality of life.

A statistical measure that tracks changes in the value of residential properties over time. Equity release providers may use this index to assess property values and future projections.

A form used by equity release providers to gather information about your health and lifestyle, which can impact the terms offered, especially for enhanced lifetime mortgages.

An assessment conducted by an independent surveyor to determine the current market value of your property as part of the equity release application process.

Insurance that covers your home and possessions against risks such as fire, theft, and natural disasters. It is usually a requirement for obtaining an equity release plan to ensure the property is adequately protected.

A professional who conducts a valuation of your property to determine its current market value as part of the equity release process.

A tax on the estate (property, money, and possessions) of someone who has died.

A type of lifetime mortgage where you make regular payments to cover the interest, preventing it from rolling up and reducing the final repayment amount.

A detailed document provided by the equity release provider that outlines the terms of the equity release plan, including the interest rate, fees, and the projected impact on your home’s equity over time.

A feature in some equity release plans that allows you to receive regular income payments from the equity released, rather than a single lump sum.

A feature in some equity release plans that allows you to protect a portion of your property's value to be passed on to your beneficiaries, ensuring they receive an inheritance.

The amount of money you receive when you first take out an equity release plan, before any additional drawdowns or accrual of interest.

The percentage charged on the amount borrowed through an equity release plan, which can be fixed or variable and affects the total amount to be repaid.

An equity release plan where the funds released are invested, and the returns on the investment are used to pay off the interest or reduce the loan amount.

An equity release application made by two individuals, typically spouses or partners, allowing them to release equity from their jointly owned property.

A form of property ownership where two or more people own the property jointly. In the context of equity release, if one joint tenant dies, the property automatically passes to the surviving joint tenant(s).

A document provided by the equity release provider that outlines all the key details of the proposed equity release plan, including costs, terms, and the effect on your home’s equity, ensuring you have a clear understanding before proceeding.

The most common form of equity release, where you borrow a portion of your home’s value at a fixed or variable interest rate and retain ownership of your home. The loan, plus interest, is repaid when you die or move into long-term care.

The ratio of the loan amount to the value of the property, expressed as a percentage. For equity release, the LTV ratio determines how much equity you can release from your home.

Services that help meet the medical and non-medical needs of people with chronic illness or disability. The need for long-term care can trigger the repayment of an equity release loan.

An agreement within a Home Reversion Plan where you sell a portion or all of your property in exchange for a lump sum or regular payments, while retaining the right to live in your home rent-free for the rest of your life.

A single payment received from an equity release plan, as opposed to regular smaller payments. This can be used for significant expenses like home improvements, debt repayment, or other large purchases.

The financial institution or company that provides the equity release plan and funds to the homeowner.

The estimated amount that your property would sell for on the open market at a given time. The market value is used to determine the amount of equity you can release.

State benefits that are dependent on your financial situation. Releasing equity from your home can affect your eligibility for means-tested benefits such as pension credit or council tax support.

Regular payments received from certain types of equity release plans, such as an income drawdown plan, providing a steady stream of income rather than a lump sum.

The minimum market value that a property must have to qualify for an equity release plan. Providers usually set a minimum value threshold.

A promise from the equity release provider that you or your beneficiaries will never owe more than the value of your home when it is sold.

A situation where the outstanding loan amount exceeds the market value of the property. Most equity release plans include a no negative equity guarantee to protect homeowners from this risk.

A person or entity designated to receive benefits or funds from an estate or financial product. In the context of equity release, this could refer to someone who benefits from any protected inheritance.

A type of loan where the lender's only recourse in the event of default is to seize the property used as collateral. In equity release, this typically means the lender cannot seek repayment from other assets or income of the borrower or their estate.

An assumed rent value used for calculation purposes, particularly in means-tested benefit assessments. Equity release funds could affect the assessment of notional rent.

The ability to make voluntary payments towards the loan amount in an equity release plan, which can help to reduce the overall interest accrued and the total amount owed.

The right of the homeowner to continue living in their property after entering into an equity release agreement. This is a key feature of both Lifetime Mortgages and Home Reversion Plans.

The remaining amount of the loan that still needs to be repaid, including any accrued interest, at any given point during the equity release plan.

Payments made above the required amount in an equity release plan. Some plans allow overpayments without penalties, which can help reduce the overall loan balance and interest.

Payments made towards the equity release loan that reduce the amount owed, typically allowed without penalty within certain limits.

A customised document provided by the equity release provider that shows the specific details of how the equity release plan would work for you, including projected costs and the impact on your estate.

A feature of some equity release plans that allows you to transfer the plan to a new property if you move, provided the new property meets the lender's criteria.

The original amount of money borrowed through the equity release plan, excluding any interest or fees that accrue over time.

A feature that allows you to safeguard a portion of your property's value to ensure it can be passed on as an inheritance to your beneficiaries.

The financial institution or company that offers the equity release plan, such as a bank, building society, or specialist lender.

The intended use of the money released through an equity release plan, which can include home improvements, debt consolidation, travel, or supplementing retirement income.

The minimum age at which a homeowner can apply for an equity release plan, typically starting at 55 years old.

The set of conditions that must be met to be eligible for an equity release plan, including age, property type, and property value.

An estimate provided by the equity release provider outlining the terms of the potential plan, including the amount you can borrow, the interest rate, and any associated fees.

An estimate of the property's value if it needs to be sold quickly, often lower than the open market value. This can sometimes be a consideration in the equity release process, particularly in cases of financial urgency.

The agreed terms under which the equity release loan will be repaid, usually when the homeowner dies or moves into long-term care.

The process of paying off the equity release loan in full, including any interest and fees, thereby releasing the property from the lender’s charge.

A financial adviser who is authorised and regulated by the Financial Conduct Authority (FCA) to provide advice on equity release products.

An equity release plan that complies with the standards and regulations set by the Financial Conduct Authority (FCA), offering consumer protection and ensuring fair practices.

The amount of money that is made available to you through an equity release plan, which can be taken as a lump sum, regular payments, or a combination of both.

The process of switching your existing mortgage to a new deal, with either your current lender or a different lender. This is different from equity release, but some consider it as an alternative option for accessing funds.

The interest retained by the homeowner in a home reversion plan, where a portion of the property is sold to the provider, but the homeowner retains the right to live in the property rent-free for life.

The legal right of the homeowner to continue living in their property until they die or move into long-term care, as guaranteed by both lifetime mortgages and home reversion plans.

Interest that is added to the principal loan amount and accrues over time. In equity release, this means that the interest compounds, increasing the total amount owed.

A legal professional who provides advice and assistance with the legal aspects of the equity release process.

An assessment carried out by an independent surveyor to determine the market value of your property as part of the equity release application.

A professional who assesses the market value of your property as part of the equity release application process. The surveyor’s valuation helps determine how much equity you can release.

The amount you would receive if you chose to terminate your equity release plan early. This value can be significantly less than the amount originally released due to fees and accrued interest.

Government-provided benefits that may be affected by taking out an equity release plan, particularly means-tested benefits such as pension credit or housing benefit.

An interest rate that can change over time, typically in line with changes in the Bank of England’s base rate. Some equity release plans may have an SVR, which affects the cost of the loan over time.

A detailed survey of the condition of your property. While not always required for equity release, it can be necessary if the property has known issues or if requested by the lender.

A document provided by your financial adviser detailing why a particular equity release plan is recommended for you, based on your individual circumstances and needs.

The money released through equity release is not subject to income tax, allowing you to use the funds without immediate tax implications.

A form of property ownership where two or more people own separate shares of the property. In equity release, each owner’s share can be used independently for equity release purposes.

The period over which the equity release plan is expected to run, usually until the homeowner dies or moves into long-term care.

Legal documents that prove ownership of the property. These are required during the equity release process to verify that you own the property outright or to confirm the existing mortgage balance.

The total sum that will be owed by the end of the equity release plan, including the initial loan amount, accrued interest, and any fees or charges.

A legal arrangement where one person (the trustee) holds property on behalf of another (the beneficiary). Some homeowners use trusts as part of their estate planning in conjunction with equity release.

An individual or organization that holds or manages and invests assets for the benefit of another. In the context of equity release, a trustee might be involved in managing the funds released.

The process by which an equity release provider assesses your application, including your property valuation and personal circumstances, to determine eligibility and terms of the plan.

A property that is free of any mortgages or loans. Such properties are often preferred for equity release plans as they simplify the process.

Fees and charges that need to be paid at the start of the equity release process, such as application fees, valuation fees, and legal fees.

The potential increase in property value over time. In the context of equity release, this can affect the remaining equity in the property when it is eventually sold.

An interest rate on the equity release loan that can change over time, typically in line with market conditions, as opposed to a fixed interest rate which remains constant.

A fee charged by an independent surveyor to assess the market value of your property as part of the equity release application process. This fee is usually paid upfront.

An interest rate on the equity release loan that can change over time, typically in line with market conditions or the Bank of England’s base rate. This can affect the amount of interest accrued on the loan.

Payments made at your discretion to reduce the balance of the equity release loan. Some plans allow voluntary repayments without penalties, helping to manage the total amount owed.

An inspection carried out by a qualified surveyor to determine the current market value of your property. This is a crucial step in the equity release process to establish how much equity can be released.

The seller of a property. In the context of a Home Reversion Plan, the homeowner acts as the vendor, selling a portion or all of their property to the provider.

A period during which a property is unoccupied. For equity release, maintaining occupancy is often a requirement, and extended void periods could affect the terms of the plan.

A legal agreement where a person living in the property, who is not the owner, agrees to vacate the property when the equity release plan ends.

A feature in some equity release plans, particularly drawdown lifetime mortgages, that allows you to withdraw funds as needed from a pre-agreed cash reserve.

The legal process of distributing a deceased person’s estate according to their will. Equity release can impact the estate’s value and should be considered when planning wills and probate.

A detailed document provided by the equity release provider that outlines the specific terms and conditions of the proposed equity release plan, including costs, interest rates, and the impact on your home’s equity.

An investment fund that some equity release providers may use to manage the funds released to you. The returns on these funds can affect the amount of money you receive and the interest accrued.

Guarantees provided by the equity release provider regarding certain aspects of the plan or property, such as the condition of the property or the terms of the equity release agreement.