Equity release

Speaking to a Specialist Financial Adviser from Wesleyan Financial Services carries no obligation.

If your Specialist Financial Adviser from Wesleyan Financial Services considers equity release as a possible option, they'll refer you to HUB Financial Solutions. There is no obligation to proceed, but if you do take out a plan, there will be a fee of £1,100 to cover the advice and arrangement of your chosen plan. This will be paid to HUB Financial Solutions.

If you’re eligible for equity release, there are a number of factors that will determine how much money you can take from your home.

For example, the value of your property. As part of the application process, your provider will carry out a professional valuation that will help to inform how much equity you’re able to release.

Another example is how long you’re likely to live in your home after taking out your plan. This calculation is based on your age and your health. If you make a joint application, the estimate will be based on the details of the youngest applicant.

Your lender will also look at the type of property you live in, as well as it’s condition and location.

Most equity release plans (such as a lifetime mortgage) will allow you to move your product to a new home – provided your lender approves the new property.

If you want to move into a home that is significantly cheaper than your existing property, your provider may be unwilling to lend as much against it. If this is the case, you may have to repay some of the mortgage early, potentially triggering early repayment charges.

Generally speaking, it takes around six to eight weeks (from when your application is accepted) to release equity from your home, but this does vary. Equity release is a big decision, and there are usually several stages involved.

These stages are likely to include receiving advice, submitting your application, carrying out a property valuation, seeking legal advice, getting your offer and, finally, the release of funds.

If you take out a lifetime mortgage, you may be able to pay back some or all of it early.

Sometimes this can help to reduce the cost of the overall loan, but you may face early repayment charges which could make it more costly.

There are certain circumstances where you may be able to avoid paying an early repayment charge. For example, if you’re moving house, your lender may let you transfer your lifetime mortgage to your new property without charge.

This is why it’s important to understand the terms of your arrangement before taking out an equity release plan.

As inheritance tax is based on the size of your estate, and equity release reduces the value of your estate, the amount of any inheritance tax payable on your death may be lower. 

While this may sound appealing, it’s important to remember that equity release will also reduce the amount of capital that is passed onto your beneficiaries when you die.

This is because you’ll receive lump sum or regular payments from your equity release provider on the understanding that they are repaid when you pass away or move into long-term care. This usually involves selling your home to settle the bill – meaning your family won’t inherit it.

If you use equity release to gift money to friends or family, this may also be subject to inheritance tax. You can find more information on gifting on the UK government website.

Please note that the Financial Conduct Authority does not regulate inheritance tax planning.

While equity release can provide an effective way to support your plans for retirement, it isn’t for everyone. There are a number of alternatives to consider before making a decision, with the most common being downsizing.

Other alternatives include remortgaging and exploring local authority grants available to those who are looking to update their home so they’re able to continue living there independently.

To explore other ways to free up your finances, speak to a Specialist Financial Adviser from Wesleyan Financial Services today.