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What is equity release?

Saga Equity Release helps explain how equity release works

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Friday, 9am to 5.30pm,

excluding Bank Holidays

Equity release means you can unlock tax-free cash from the value of your home

If you bought your property some time ago, even if you still have a mortgage, there’s likely to be a considerable amount of value in it. Saga Equity Release offer free and comprehensive advice on lifetime mortgages and other alternatives to freeing up the capital that’s tied up in your home.

What is equity release?

Equity release is a way of unlocking some of the value of your home and turning it into tax-free cash. The most common way to release equity from your home is by setting up a lifetime mortgage, similar to a normal mortgage except that none of it has to be paid off while you’re still living in your home.

A lifetime mortgage is usually repaid from the sale of your property after your death or if you move permanently into long-term care or the death or move into long-term care of the last borrower if borrowing jointly. When this happens, there is a 'no negative equity' guarantee that means you or your estate won’t have to pay back more than the value of your home when it’s sold, providing you have met the terms and conditions.

With the other main type of equity release, the home reversion plan, you sell all or a percentage of your home to a specialist firm, receiving a lump sum, regular payments or both in return.

How does equity release work?

  • You have to be 55 or over with a UK home worth at least £70,000 to be eligible.
  • The cash you release is tax free.
  • You can use the money for almost anything you choose.
  • You still own your home and you can continue to live there with a lifetime mortgage.
  • Some equity release products enable you to receive regular payments.
  • There’s no need to make monthly repayments, but with some products you can choose to pay off some or all of the interest as you go.
  • You can move house as long as the new property meets the lender’s criteria.
  • All lenders must adhere to standards set by the Financial Conduct Authority (FCA).
  • The Equity Release Council’s ‘no negative equity’ guarantee means your beneficiaries will never owe more than the property is worth when it’s sold.
  • Equity release will reduce the value of your estate and may affect your entitlement to means-tested state benefits.

What can you use equity release for?

The money available from equity release is yours to spend on almost anything you want to. It can be used for home improvements and repairs, travel and hobbies, debt consolidation and family, simple day-to-day living expenses, and so much more.

We asked a sample of Saga customers what they used their equity release cash for (survey of Saga customers’ stated intended purpose of equity release from 1st October to 17th November 2021, conducted by HUB Financial Solutions Limited). Some customers use the money for more than one purpose.

  • Home improvements – 56%

New bathrooms and kitchens, extensions or conservatories, triple glazing or loft conversions… these are just a few of the improvements that could add more comfort and value to your home.

  • Finances - 37%

Equity release can be used to pay off traditional mortgages, loans, credit cards and more. Please note consolidating existing debts using equity release could end up costing more long term.

  • Holiday/leisure - 22%

A cruise, a safari, a visit to family down under… equity release could make your dream holiday happen.

  • Emergency fund - 25%

Having accessible money to pay for unexpected repairs and bills can take some of life's worries way.

  • Car - 19%

Equity release gives you a chance to replace the tired old car or even splash out on that new one you’ve always wanted.

  • Gifts to family - 19%

Giving loved ones their inheritance early can help with big expenses, such as education costs, weddings, house deposits and even driving lessons.

The myths about how equity release works

  • It’s unsafe and unregulated: this isn’t the case. Equity release providers are required to meet the standards of the Equity Release Council and the Financial Conduct Authority. Find out more about the safeguards that protect equity release .
  • I can’t release equity if I have an outstanding mortgage: yes you can, depending on the size of your remaining mortgage and how much money you're able to release, but you will need to pay off your existing mortgage balance at the same time. Just be aware that using equity release to repay existing debts or mortgages may cost more in the long-term.
  • I could be forced to move out of my home: you have the right to remain in your property for life or until you need to move into long-term care, provided you abide by the terms and conditions of your contract.
  • I’ll leave my family in debt: your beneficiaries will never have to repay more than your home sells for, even if it is less than the amount owed.
  • I won’t be able to leave my property as an inheritance: when you die or move into permanent long-term care, your property is normally sold to pay off the equity release provider. Any remaining money from the proceeds of the sale can be passed on to your loved ones. If the loan can be repaid by other means, the house does not need to be sold to cover the debt.

Why choose Saga Equity Release?

At Saga, we’ve been fulfilling the personal finance needs of the over 50s for more than 20 years, so we know our customers expect excellent service as well as high-quality products.

That’s why we’ve chosen HUB Financial Solutions Limited to provide Saga Equity Release – a FREE advice, no-obligation, no-pressure service dedicated to finding out if equity release is right for you.

The product available through Saga Equity Release is the Saga Lifetime Mortgage, which is available exclusively through this service and is provided by Just.

How can Saga Equity Release help?

Saga Equity Release can help you understand if equity release is right for you, and offers a wide range of advice that covers eveything you need to consider before you go ahead. With us you get:

  • No obligation to proceed: you’ll never be pressurised into taking out equity release. In fact, 37% of people who speak to our specialist advisers find that equity release is not right for them. This is based on customers who booked a first appointment through Saga between January and December 2021.
  • FREE advice: you won't be charged a fee for the advice you receive through Saga Equity Release. So you'll be able to discover the facts about releasing equity from your home free of charge without having to pay an advice fee - whether or not you decide to go ahead.
  • Exclusive lifetime mortgage: the Saga Lifetime Mortgage is not a one-size-fits-all product. It offers a range of flexible options, exclusive features and can be tailored to meet your individual circumstances. If equity release is the right option for you, the Saga Equity Release team will go through it with you in more detail.
  • Money Back Guarantee: it's very difficult to know what's right around the corner. That’s why with a Saga Lifetime Mortgage, if you no longer need the money, you can pay back what you borrow within six months of the completion date of your initial advance. You won’t need to pay any interest or any early repayment charges – you just pay the money back and walk away. To be eligible for this Guarantee your initial advance must not exceed £150,000. There are other eligibility terms that you need to be aware of and you can find all of these on our terms and conditions page.
  • Saga Service Promise: Saga understand that it's important to know when you'll have access to the money you've applied for. The Saga Lifetime Mortgage comes with a Saga Service Promise included as standard. You can rest assured that we'll aim to release your money to your solicitors account within 40 working days after your application has been accepted by Just. If this doesn't happen, you'll receive £100. This Promise will not apply if you’re using the Saga Lifetime Mortgage to purchase a new property, rather than re-mortgaging an existing one. For the full details and eligibility criteria, see our terms and conditions page.
  • Two-way process: when you speak to a Saga Equity Release adviser you will have a thorough discussion about your individual circumstances and your wishes for the future.
  • Financial review: your adviser will put together a personal financial report based on the information you provide.
  • Free state benefit check: a review will be done to ensure you’re receiving everything you’re entitled to. You’ll also be advised if equity release could affect any benefits you currently receive.
  • Alternatives explored: it’s essential to find the right financial solution for you, so your adviser will help you look at alternatives to equity release to access the funds you need.

Equity release is a big step as it will reduce the value of your estate and can affect eligibility for means-tested state benefits.

You can call the Saga Equity Release team on 0800 096 7120. Lines are open Monday to Thursday, 9am to 8pm and Friday 9am to 5.30pm (excluding bank holidays).

Why you can trust Saga Equity Release

Saga Equity Release and HUB Financial Solutions Limited are members of the Equity Release Council. This industry body ensures that all equity release products are safe and suitable for customers.

As members of the council, both Saga and HUB Financial Solutions Limited follow its strict Statement of Principles that protects customers at every stage of the equity release journey. Find out more about the Equity Release Council.

HUB Financial Solutions Limited will pay us an introductory fee if you decide to take out a lifetime mortgage through equity release.

Is equity release right for you?

If you want a quick indication of how much equity you could release from your home, simply enter a few details into our equity release calculator.

Alternatively, you can call the Saga Equity Release team on 0800 096 7120. Lines are open Monday to Thursday, 9am to 8pm and Friday 9am to 5.30pm (excluding bank holidays).