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Equity release - Eligibility

Here to help

The Saga Equity Release Advice Service, provided by HUB Financial Solutions Limited, gives you access to a range of carefully selected products and providers. Equity release is not right for everyone and will reduce the value of your estate.

These questions will help you understand whether equity release could be a good option for you and help you think about possible alternatives.

Having an outstanding mortgage will affect how much you can release

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If you have an existing mortgage or other debts secured against your home, these would need to be paid off when you release the money from your home. Don’t worry though, if you wish, you can use some of the money from your equity release to do this. However, using equity release to repay existing debts or mortgages could cost more in the long-term.

Good news, if you don’t have an existing mortgage or other debts secured against your home and are eligible for equity release you could receive 100% of the equity you’re eligible to release. It’s important to know that if this isn’t the case they would need to be paid off when you release the money from your home.

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Having access to savings could be a viable alternative

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There are alternatives to equity release and your financial adviser will want to discuss these with you as part of the equity release advisory process and having savings available may mean you’ll be able to release less equity from your home, or that equity release may not be right for you.

Having savings may mean you'll need to release less equity from your home but for many this isn’t possible. Even if you don’t have any savings it’s important to make sure you’ve considered the alternatives. Your financial adviser will discuss these with you as part of the equity release advisory process and will support you in making the right decision for you.

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One of the most important factors that will decide how much money you are eligible for is the property valuation.

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It's possible that the value of your property has changed. If you were to proceed with equity release an independent valuation will be instructed by the Provider and are a standard part of the application process, just as with a standard mortgage.

The internet is a good resource to find realistic ideas of the current value of properties especially of properties that are similar to yours. Another good idea to consider during the property valuation process is to request a market appraisal from your local estate agent. These can usually be obtained free of charge. If you were to proceed with an equity release product an independent valuation will be instructed by the Provider, just as with a standard mortgage.

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The costs involved in setting up equity release vary between different providers so be sure to ask about all fees before making a commitment.

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It’s important to know that you remain responsible for repairing and insuring the property. The equity release provider will expect you to maintain your home to a reasonable standard.

Make sure you’re fully aware of any completion, arrangement, advice and application fees as well as valuation and solicitors’ fees.

Typically, costs include:

  • completion, arrangement or application fees to cover administration costs
  • valuation fees that are linked to how much your home is worth, with higher prices for more expensive properties
  • solicitor's fees, which include the cost of the legal work carried out on your property (your solicitor should give you a breakdown of these fees).”

Make sure you’re fully aware of any completion, arrangement, advice and application fees as well as valuation and solicitors’ fees.

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You need to consider the impact of releasing equity on your current and future entitlement to benefits

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As part of the Saga Equity Release Advice Service your adviser will prepare a financial assessment including a state benefit check. Many older people are entitled to, but do not claim, social security benefits, both means-tested and non-means-tested.

Money received from equity release can affect your entitlement to means-tested benefits such as Pension Credit, help with health costs and Council Tax Support (Council Tax Reduction Scheme in Wales). All Saga Equity Release Advice Service advisers will consider this and your future plans and needs when assessing whether an equity release product is suitable for you.

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Releasing equity won’t always be the most suitable option, it’s important to look at all your alternatives

If you have savings tucked away for a ‘rainy day' you could use these funds in retirement. Adjusting your regular spending will help  your household budget and you should consider looking at your overall spending habits to see how you can make the most of what you already have.

Downsizing by selling and moving to a smaller, less expensive property can free up some extra cash, but you’ll have to leave what might be your longstanding family home, plus there are the extra costs of moving to factor in as well, such as estate agents’ and solicitors’ fees, not to mention stamp duty, and even having to potentially buy new furniture or redecorate to suit your tastes. Having said all this, equity release may work out more expensive in the long term than downsizing to a cheaper property. Talking with the Saga Equity Release Advice Service will help you understand the pros and cons.

If you think you may need to move into residential care, now or in the future, equity release may not be suitable. This is because equity release is designed to be repaid if you move permanently into a care home. Eligibility for help with future care home fees can be affected, so discussing this with a financial advisor is important.

Continuing in, or returning to, paid work to top up your income, letting out a room in your house to a tenant, accepting financial support from a relative or friend or maybe arranging a traditional mortgage are all viable alternatives in some cases. Your situation is unique and so it’s important to be aware of your options and that you make the choice that best suits you.

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Equity release refers to a range of products letting you access the equity (cash) tied up in your home if you are aged 55 or over. You can take the money you release as a lump sum or, in several smaller amounts or as a combination of both.

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This is the most popular equity release product, where you borrow some of your home’s value at a fixed or capped interest rate. Interest is compounded, meaning that you pay interest on interest, although this can be avoided if you choose to make monthly repayments which is an option on some products. The roll up of interest can only be avoided if you pay 100% interest payments.

There is a type of equity release product that combines an initial tax-free lump sum payment with ongoing tax-free monthly payouts, making it an option if you’re looking to supplement your income in retirement.

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Introduced by the Equity Release Council the guarantee protects you and your estate. alternative

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As you’ll be aware, the guarantee means that you that you or your estate will never owe more than your property is sold for following death or entering long-term care.

Under your equity release plan, you have the right to live in your home until you move into long-term care, or until death. Following one of these events your property will be sold and the sale proceeds will usually be used to repay the money owed to the provider of your plan. The Equity Release Council’s ‘no negative equity’ guarantee means that you or your beneficiaries will not have to repay more than the sale proceeds following death or moving into long-term care - even if this is less than the amount owed.

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There are differences between the types of plan available so it’s worth knowing what they are.

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It’s reassuring to know that both types of plan are regulated by the Financial Conduct Authority (FCA).

A Lifetime Mortgage is a type of loan secured against your home where you can choose to extract your funds in a single lump sum or in smaller amounts over time up to the maximum limit agreed with the plan provider. You retain full ownership of your home and interest on the loan is usually fixed and rolled up and added to the loan.

With some plans you can make monthly interest repayments in part, or in full. If you pay the interest in full, you can maintain the debt to the initial amount of the loan before interest. If you choose to make interest repayments, you still have the option to move to a roll up arrangement at a later date if you wish.

With a Home Reversion plan, the provider will purchase all or a part percentage of your house. You know precisely what portion of your property you have parted with and, equally, what has been ring-fenced for later use, possibly to leave in a Will. The percentage you retain in your property will always remain the same regardless of the change in property values, unless you decide to take further cash releases. You will be provided with a tax-free cash lump sum (or regular payments) and a lifetime lease, guaranteeing you the right to stay in your property for the rest of your life or until you move into long-term care. At the end of the plan your property will be sold and the sale proceeds are shared according to the remaining proportions of ownership.

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Still have questions?

The team at the Saga Equity Release Advice Service are here to help in any way they can.

Important information

The Saga Equity Release Advice Service, operated by HUB Financial Solutions Limited, is a complete service offering everything from information through to selecting equity release options for clients. You do not need to pay for its comprehensive, no-obligation advice unless you take out an equity release product recommended by an adviser.

We (Saga) use the data we collect from you for administrative purposes such as preparing quotations, managing holiday bookings and fulfilling subscriptions. We also use it to contact you and personalise our communication. We will contact you by post, telephone, email or other means to tell you about offers, products and services that we think may be of interest to you based on what you have told us or as a result of previous dealings with us. If you wish to opt out of receiving such information, revise the products you would like to hear about or change the method we use to communicate with you, you can do so at any time by calling us on 0800 092 3665 or via MySaga. For further information about how the Saga Group uses your personal information, please visit our privacy policy.

Your information will also be passed to HUB Financial Solutions Limited. By providing the requested data (whether partially or in full), you consent to HUB Financial Solutions Limited contacting you to progress your equity release enquiry. HUB Financial Solutions Limited will use the data only in relation to the Saga Equity Release Advice Service and for no other purpose. For further information about how HUB Financial Solutions use your personal information, please see HUB Financial Solutions Limited privacy policy. Saga Personal Finance is a registered trading name of Saga Personal Finance Limited, which is registered in England and Wales (Company No. 3023493). Registered Office: Enbrook Park, Sandgate, Folkestone, Kent CT20 3SE. Saga Personal Finance Limited and HUB Financial Solutions Limited are authorised and regulated by the Financial Conduct Authority. Customer benefits offered by Saga Membership Limited that are not part of financial services are not regulated products.