As you approach the later years of your life, you can release the equityThe difference between the value of the property and the amo... in your home in so many ways – to help a family member buy their own property, for example, or to fund the repairs, home improvements, or the building of a conservatory or other extension to your own home. You might want to buy a new car or aim for a better lifestyle.
Let’s see how equity release for the over 90s can help you do just that.
What is equity release?
Equity release describes the process whereby a homeowner chooses to access the stored value built up over the years in their property. Several products facilitate this process, which effectively provides the cash value of that equity in the shape of a loan. The advance is made by way of either a lump sum payment, instalments, or a mixture of the two.
Equity release products fall into two major categories:
- a lifetime mortgage is – just as any other mortgage – a loan secured against your property;
- in the case of an equity release lifetime mortgage, however, you typically have the option of paying fixed-rate monthly interest payments or allowing them to roll over until the capital amount is repaid when you die, or the home is sold because you are going into long-term care;
- in this way, you have released at least some of the equity otherwise locked up in your home – yet can still live there;
- equity release home reversion is less common and can only be arranged once you have reached a minimum qualifying age;
- although you continue to live there, a home reversion typically entails selling at least part of your home in return for payment of a cash sum, a fixed income for the remainder of your life, or a combination of the two.
Choosing either of these types of equity release is not a decision to be undertaken lightly. You must do your homework before making any such decision – and, in most cases, you will also want to consult your family about the implications for their inheritance of your decision.
Is there a maximum age limit for equity release?
Neither home reversions nor lifetime mortgages have formal maximum age limits. These types of equity release are designed to provide a cash sum or ongoing source of income from a product that lasts until you die or move into long-term care – so there is no formal upper age limit.
Some providers, however, may have policies that limit the uptake of equity release once you reach 80 to 100 years of age – depending, of course, on the provider.
Equity release is typically reserved for homeowners over the age of 55. If you are below that threshold, you might still qualify for some types of equity release, but you may expect some age restrictions and limits adopted by specific providers.
Read our previous blog, if you are also interested in equity release for home improvements.
Can I get equity release for over 90s?
Equity release has become an increasingly popular means of raising extra cash. According to a story in the Daily Mail on the 8th of September 2022 , the number of applications has more than doubled in the past seven years.
But the UK’s population is also quite naturally ageing. The Office for National Statistics (ONS) reveals that the population over the age of 90 now numbers more than 600,000 individuals – and 15,000 or more of those are over the age of 100.
Against this background, the over 90s are especially well represented in what has become a booming equity release market – older consumers look to make up for shortfalls in their retirement pension plans, commission home improvements rather than downsize, fund much-needed social care at home, or splash out on realising the dreams of a lifetime.
An equity release mortgage or home reversion can provide the funds for whatever you need. You won’t even need to move home or look for anywhere smaller or cheaper to live to unlock the cash otherwise locked away in the property you want already own.
What do I need to consider with over 90s equity release?
If you are interested in equity release, you might want to consider whether:
- a lifetime mortgage or home reversion is likely to be more appropriate;
- if it is a lifetime mortgage, whether you will opt to pay the fixed-rate monthly interest repayments or allow these to rollover until the principal is also repaid at the end of the mortgage term;
- the amount you want to draw down as an immediate cash withdrawal and the balance that you will save for future withdrawals;
- if you want to leave at least part of your home as an inheritance after you die, you will need to decide what proportion of your home’s equity you wish to release by way of a lifetime mortgage;
- weighing up the economic benefit of equity release will depend on a calculation of the provider’s loan to valueThe ratio of the mortgage amount to the value of the propert... (LTV) assessment of your home or the valuation of your home in any home reversion agreement.
These can be difficult considerations to weigh up and require careful thought. Here at NeedingAdvice.co.uk, of course, we are more than happy to help you make those decisions – and would, in any event, urge you to seek such independent financial advice.
Does equity release affect benefits?
Benefits you receive might be calculated according to your savings and income – they are means-tested.
Whether the proceeds of any equity release agreement affect the calculation of those benefits depends on their use. Equity release is made by way of a loan, and if you use that loan to repay a mortgage or other secured loan, it is an expense that is neither income nor savings. Any cash from the equity release that you might have retained as savings, however, might be considered for re-assessing any benefits for which you are eligible.
If you are concerned about the likely effect on your benefits, your first point of reference might be the government website .
Equity release provides a means for releasing some or all the value otherwise locked away in the home that you own. You can continue to live there while receiving a substantial cash sum in return for accessing that equity.
But any such decision requires especially careful thought and, here at
NeedingAdvice.co.uk, we have the expertise and experience to offer you that independent assessment and guidance you may need.