From age and location to property condition, what matters for equity release?
Equity release criteria doesn't need to be confusing. From basic age and location qualifications to more complex issues around freehold or leasehold, we look at what factors affect who is eligibile for equity release plans.
Who is eligible for equity release?
To be eligible for the Saga Lifetime Mortgage, provided by Just, the following minimum equity release criteria apply:
- You must be 55 or over
- You must own a home in the UK
- Your home must be worth at least £70,000
The following may also impact your eligibility:
- Your property type – if your property is of non-standard build such as pre-fab, wooden or steel frame, it may not qualify.
- The property tenure – whether leasehold properties are eligible depends on the length of lease left.
How do you know if you meet the eligibility criteria?
Answer our equity release criteria questions to help you understand whether equity release could be a good option for you and help you think about possible alternatives.
Saga Equity Release, provided by HUB Financial Solutions Limited, gives you access to all the information you need to explore if equity release is right for you. Equity release is not right for everyone and will reduce the value of your estate.
There may be further criteria and differences between providers that may affect your eligibility for some plans. We’ll look at these in more detail.
How does age affect who is eligible for equity release?
If you own your home jointly, the youngest homeowner must be at least 55 for you to qualify for a lifetime mortgage. Home reversion plans usually need you to be 60 and over.
It's always the age of the youngest homeowner that's taken into consideration for equity release criteria. Some providers will allow you to take out a plan if the younger owner is less than 55, but that involves removing them from the deeds of your property.
The owner under 55 would need to take independent legal advice and sign a waiver. This would mean them giving up the right to continue living in your home once you die or go into permanent long-term care.
With the Saga Lifetime Mortgage, provided by Just, the youngest homeowner must be 55 or over to qualify.
Does the location of your home affect eligibility for equity release?
Your property must be in the UK to qualify for an equity release plan, and while many providers require this to be your primary residence, some providers will consider buy to let propoerties as well.
The equity release provider will decide whether they will lend to you based on where you live. Most providers will only accept properties on the mainland and some won't lend to properties in certain areas such a Northern Ireland.
The provider will also consider local conditions that might affect a property’s eventual resale. If you’re located near certain commercial properties, a railway line, or have a coastal property where erosion is an issue, you may not be eligible.
Does the value of your home matter for equity release?
The amount of equity you can release will depend to an extent on how much your property is valued at. Most providers say your property must be worth at least £70,000 for you to qualify for equity release, although some might have higher minimum property values.
Some providers will have maximum property values for qualification. With the Saga Lifetime Mortgage, provided by Just, the maximum amount you can borrow on the value of your home is £800,000 in England, Wales and Scotland and £250,000 in Northern Ireland.
How does the condition of your home affect equity release eligibility?
Your property will need to be in good condition to qualify for equity release. When providers are considering whether to lend you money, they are thinking about the resale value at the end of the loan period.
Providers will expect your home to be properly maintained and if it needs repair, they may request changes to be made before agreeing to a loan. They will need to see a surveyor’s report on the property which will establish whether your property meets the equity release criteria.
Can all properties qualify for equity release?
Most standard construction properties do qualify, including houses, bungalows, and flats. Different providers might have rules around non-standard properties such as those with an annexe, flat-roofed properties, or timber-framed properties, but this varies.
Other types of property may come under additional scrutiny:
- Leasehold: Equity release is possible if the remaining lease meets the providers requirements, which will require a set number of years remaining on the lease. As an alternative it may be possible to extend the lease as part of the equity release process.
- Ex local authority: These properties can qualify for equity release, but your provider will look at the number of properties that are still local authority owned in your area.
Can you get equity release if you still have a mortgage?
You can qualify for equity release if you still have a mortgage, but it needs to be paid off at the point the equity is released, which can be through the use of other funds or by using some of the equity release loan to pay off what’s left. This means that you need to have enough available equity to cover the outstanding amount, and then any left over money will be paid to you.
How much can you borrow with equity release?
You will need to borrow at least £10,000 with a lifetime mortgage with most providers, although this minimum amount may be higher for higher value properties.
The maximum you can borrow is based on the value of the property, along with the age of the younger homeowner and their health and lifestyle. Older borrowers can usually borrow a higher amount, because they are expected to have a shorter length of loan.
Find out how much you could borrow with the Saga Equity Release calculatorUse our calculator
Does your credit score matter?
A less than perfect credit score is unlikely to affect your eligibility for equity release. This is mostly because you won't be required to make regular repayments on a lifetime mortgage, so a provider doesn’t consider your income and expenditure.
Providers will consider you if you have a poor credit history, but certain issues may have an impact on your eligibility. You may not qualify if you are bankrupt, but some lenders will accept an adverse credit history or county court judgements (CCJs).
Check your eligibility for equity release
To check if you’re eligible for equity release, you can get started by answering a few questions on our online eligibility checker.
More on equity release
For more information and to help you understand equity release a little better visit some of our other articles and pages.