Equity Release loans are aimed at those in retirement who want to unlock the cash tied up in their home. With that in mind, lenders are only willing to offer an equity release loan to people who fit certain criteria, one of which is age.
What Is the Equity Release Age Criteria?
The minimum age for a lifetime mortgage Equity release plan is 55 years. For a home reversion plan, the age limit is usually 60 or 65 years. Most Equity release lenders have an upper age limit of 85 years.
The Equity Release age limit means that customers must be at least 55 years old, with some lenders also enforcing an upper age limit of 85 years.
Continue reading to understand all the eligibility criteria for a successful Equity Release loan application.
- – What is Equity Release?
- – How Does Equity Release work?
- – Pros & cons of Equity Release
- – Equity Release Scams to be aware of
We update all our guides regularly. If you are researching Equity Release and we haven’t got an exact guide that helps you, keep coming back as we update daily.
Equity Release the Minimum Age for Lifetime Mortgages
The most popular type of equity release loan is a lifetime mortgage. To qualify, you’ll need to be at least 55 years old. So when it comes to thinking about equity release age, 53 years is a good time to start financial planning and thinking about whether you want to apply for an equity release loan when you hit that 55th birthday.
If your home is jointly owned between you and another person, such as your partner, then you can only take out an equity release loan when the youngest partner is 55. You can get around this by transferring all of the ownership into the older party but this doesn’t come without risks.
According to the Equity Release Council 37,000+ people used Equity Release schemes in 2018, releasing over £3.06bn from their properties.
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Equity Release and the Minimum Age for Home Reversion
If you instead are considering home reversion, where you sell your home but retain the right to live there as a fee-free tenant, you’ll find that lenders often require you to be older – sometimes 60 or 65 years old.
You should always be planning for retirement, but 55 is the starting age where you can release equity from your property and is a great way to help financially in your retirement.
This is mainly due to the fact that you can ask for regular payments to be made instead of taking a cash lump sum. The older you are, the less time you’ll require monthly payments before you pass away.
What Is the Maximum Age for Any Equity Release Loan
Most Equity Release lenders will also place an upper age limit on taking out an equity release loan, usually 85 years. Some lenders will be willing to go higher up to 95 years. One of the key considerations of a lender is that the customer is sound of mind, so any reputable lender will make sure that the customer is fully understanding of the agreement they are making. Hence why upper age limits exist, to ensure more vulnerable customers aren’t taken advantage of.
How Does Age Affect the Amount You Can Borrow with Equity Release?
In short, the older you are, the more money you’ll be able to borrow with an equity release loan. It works just like a pension annuity – it’s based on your health and life expectancy, so by delaying the decision you’re essentially condensing the value of your loan into fewer years, which means a higher initial payout with less time before it is repaid.
Quick Equity Release FAQs
Home reversion plans are, in essence, a means of selling a share in your property to an investor, in exchange for payment. There are no repayments, with the investor receiving their share of proceeds when the property is eventually sold.
The Equity Release Council is the industry body which represents equity release providers, qualified financial advisers, solicitors and intermediaries. Equity release is a growing sector, especially for older homeowners who may have limited access to finance.
You need to be at least 55 years old to apply for equity release in the UK. If you are planning to make a joint application, this applies to both of you.
Equity release drawdown works by giving you the value of your loan as a pot that you can make withdrawals from. You’ll only pay interest on the money you decide to withdraw.
Equity Release enables you to release cash from your property. There are two option, a drawdown lifetime mortgage is allowing you to release the money monthly or a Lifetime mortgage Lump Sum which pays the released cash in one payment to your account.
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How Can Money Savings Advice Help You With Releasing Equity?
Here at Money Savings Advice, we have partnered with some of the UK’s leading Equity Release brokers. They have already helped thousands of people get the best Equity Release deal and they can do the same for you.
Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.
Ignatius Uirab
Ignatius is one of our leading financial specialists. With over eight years of financial experience, he has vast experience and knowledge of the financial sector. When he is not writing about how to make your money go further, he is a true family man.
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