An equity release enables you to release funds that are locked up in your property. This money can then be used for any purchase you wish, whether you want to help your children buy a home, top up your monthly income, make some home improvements, or even go on your once-in-a-lifetime holiday.
Of course, you will need to make sure that you are eligible for an equity release before you begin seriously considering this as an option. There are a number of different requirements when it comes to equity release:
Aside from this, it is imperative that your existing mortgage is paid off in full. You can either use your own savings to do this or the money that you have released from your property.
As mentioned, you are going to need to be at least 55-years-old in order to benefit from an equity release plan. However, do keep in mind that there are a lot of equity release plans that are only suitable for those over the age of 60-years-old.
What happens if you co-own the property with someone who is under the age of 55-years-old? Well, you will need them to come off the deeds for you to be able to take out an equity release plan.
The value of your property also makes a difference. It will need to be worth at least £70,000 for an equity release mortgage to be possible. Additional underwriting checks may be needed if your property is valued over £1 million.
As opposed to a maximum property value, most equity release plans have a maximum loan amount. Nevertheless, should your property be of considerable worth, the valuation may need to be paid for upfront.
No, it doesn’t. A good credit score is not a requirement for those looking to take out an equity release plan. The reason for this is because you are not going to be making any payments during the term of the plan. As a consequence, you will not need to meet any criteria in terms of the affordability.
However, if you do have any outstanding County Court Judgement’s (CCJ’s) or an outstanding IVA, you will usually be required to clear this.
Hopefully, you now have a better understanding of the eligibility requirement for an equity release. When determining whether or not this is the right solution for you, you need to carefully assess your finances. You can use an equity release calculator to help you with this, enabling you to figure out whether or not this is financially viable for you.