How does equity release work?


If you’re over the age of 55, you can unlock the value of your home without having to downsize to another property.


Equity release schemes work in two ways.


Lifetime mortgages


A lifetime mortgage is a mortgage secured against a property; this can be your main residence, second home, or holiday home. Through the mortgage, homeowners can still reside in the property and choose to take a single cash lump sum, an income, or small amounts of money received over time. This final option is known as a drawdown.


Any money received by a homeowner is tax-free and the property remains in the possession of the owner until death or a time when they are placed into long-term care.


Once you receive the money from an equity release scheme, you can use it for any legal purpose. From clearing debts through to enjoying holidays of a lifetime, the money can be spent or used at your own discretion.


Home reversion plan


A home reversion plan works differently from a lifetime mortgage, and this plan allows you to sell a percentage of the value of your property in return for a tax-free lump sum. You can also receive the money in the form of a series of capital amounts.


In this equity release scheme, the home reversion provider will offer you a lifetime tenancy, which allows you to live in your home rent-free for the rest of your life.


Although this type of scheme is less popular than a lifetime mortgage, it is one that provides homeowners with the peace of mind of releasing tax-free cash when they need it the most.


How does an equity release process work?


Although the process of equity release can sound daunting and complicated, at Freedom Advice, we have guided countless homeowners through their chosen equity release plans.


From researching the right kind of scheme for a homeowner, through to the release of funds, we can help you down your individual path towards equity release.


Generally, the equity release process with Freedom Advice works as follows:


We begin the research phase


After an initial free consultation with a member of the Freedom Advice team, we assess your situation and provide you with a tailored report that offers transparent and unbiased financial advice.


You make an application


With your detailed report at hand, our adviser will work with you and help you decide on the best course of action. From there, we will complete the application form and gather supporting documentation and materials. Once that everything is ready, our team will then send your file to the equity release provider. A valuation report will take place.


As soon as the lender receives the application, they will start to organise a surveyor to contact you and arrange a time to conduct a valuation of your property.


The surveyor, who will be completely independent, will make an informed appraisal and report their findings to the equity release lender. The outcome of the report will determine how much equity will be released from your property.


The legal process will begin


Once the valuation is complete, a solicitor chosen by you will deal with the legal process and liaise with the lender’s solicitor. They will also fill out an initial questionnaire about both you and your property. An offer will then be made by the lender, which shall be accompanied by a Solicitor’s Certificate.


An offer is made by the lender


You will receive an equity release offer from the lender, which will confirm the terms and conditions of the mortgage. This will also detail the rate, charges, and the total amount borrowed.


The offer will also require that a signature is produced in the presence of your solicitor during a face-to-face meeting.

The process is complete


Once that checks to the paperwork are made, a completion date will be set. The released funds will be sent to your solicitor with fees deducted from the overall sum.
The net amount will then be sent to a chosen bank account. Alternatively, you can receive the funds via cheque, which will be sent to you through the post.

You receive the money


Once you receive the money, you can begin with your plans. What’s more, if you wish, Freedom Advice will continue to monitor your plan throughout the years to ensure that it remains competitive and works in your favour.


Call Freedom Advice today on 0113 829 3465 to discuss your Equity Release further.


Frequently Asked Questions