Can You Do Equity Release More Than Once?
Yes, you can do equity release more than once. There are various ways for you to do this, and we will explain each one today.
Firstly, if you have a drawdown lifetime mortgage, you can release equity over and over again. This is because you get given a lump sum at the start of the scheme, and then the rest of the funds stay in a cash reserve, ready for you to withdraw when you need them.
You only pay interest on the amounts of cash that you take out of the reserve, which keeps this option affordable.
To increase the number of funds in your cash reserve, you could port your equity release plan to a new property that is higher in value. However, you would need to have this approved by your lender, and the property would have to be deemed suitable for equity release.
If you do not currently have a drawdown arrangement, your lender may allow you to switch plans from whichever plan you are currently on. It is not guaranteed that they will approve this, but it is always worth making the request.
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Switching equity release plans
As we mentioned above, you can switch equity release products in order to access different benefits.
This could include downsizing protection, no negative equity guarantees, low interest, low early repayment charges, and high loan amounts.
It is worth doing this if you are not happy with your current plan, as equity release is a long-lasting scheme, so you should always make sure you are getting as much as you can out of it.
Equity release has changed a lot over the years. If you took out equity a long time ago, your plan may be less flexible than the average modern plan. By switching to a new arrangement, you get the opportunity to enjoy a new side to equity release.
It is worth mentioning that you may not be eligible for the plan that you would like. Speak to your lender about the plans that are on offer, and they will inform you of your eligibility.
Please call our 24-Hour Helpline: 0330 058 1579
Getting a further advance
It is sometimes possible to release more equity from your home by asking your lender for additional cash, which is known as getting a further advance.
If this is in line with their regulations, they will assess your property and decide whether it would be suitable to lend more money.
The main reason that you would be denied a second equity release is that your property has dropped in value. In this case, the lender would not benefit from offering another loan, as they know that your property is not going to give them the amount of money that they hoped for.
However, this does not permanently prevent you from getting a further advance. The property market is ever-changing, and if your home rises in value over the years, your lender may be willing to offer more money.
Why Would You Do Equity Release More Than Once?
Firstly, interest rates are always changing, and you may not want to be stuck with a high-interest rate when people with traditional mortgages are benefitting from the decline in interest.
If you release equity again, you could enrol onto a plan with low-interest rates, and this could reduce the amount of money that you owe when you go into long-term care or pass away.
Secondly, you may simply prefer another equity release plan to the one you are currently on. Perhaps your personal circumstances have changed, and your plan is no longer suitable, or maybe a new plan has been created since you first took out equity.
Releasing equity on another plan could help you to access more money for retirement.
Another important point is that older equity release consumers often get lower interest rates and higher loan amounts.
If you released equity when you met the minimum age for equity release (55 years old), you may decide to do this again when you are older, as it comes with additional benefits.
Finally, you may need access to money desperately, and releasing equity again could be the fastest way to obtain this money without having to meet a repayment deadline.
For example, if you need to help a family member pay for a funeral, you may find that it is quicker and more cost-effective to re-release equity than to get a traditional loan.
Please call our 24-Hour Helpline: 0330 058 1579
Things to Consider Before Doing Equity Release More Than Once
Below, we discuss some factors to consider before releasing equity more than once:
1. How much money have you already borrowed?
If you have already borrowed the maximum amount from your home in the form of a tax-free lump sum, it is going to be much harder to re-release equity. Your equity release company will not be prepared to lend any more funds, unless your property has significantly increased in value.
However, if you opted to get the money in regular instalments, and there is plenty left, you may be able to ask for the rest of the money as a lump sum. The same applies if you requested a percentage of your loan as an initial lump sum, but left the rest in savings.
2. What do you want to use the money for?
Often, re-releasing equity will be the best way for you to access more funds in a short space of time. However, sometimes, there are superior options that do not involve compound interest.
If you do not need the money urgently, you could work and build up your savings as you do so. You could also save up your pension until you have an adequate amount. However, this only works if the money can wait, and you have enough for your everyday needs.
If there is an upcoming cost that is a large amount, and you have no other way of raising the money, re-releasing equity would be a good idea.
We recommend getting financial advice from a qualified financial adviser about your options, as they will be able to find the route that is the least risky for you.
3. What are your plans for the future?
When you are considering re-releasing equity, you need to think about how much money you will have throughout your retirement. There may come a day when you need to consider permanent care, and you would be in a very precarious position if you didn’t have access to any more equity release funds.
It is also important to think about inheritance. If you spend all of your loan, and the compound interest has been building, your family could be left with nothing when you pass away.
However, there is a way around this; you could secure inheritance protection for your family, which establishes guaranteed inheritance.
4. Have you spoken to your equity release provider?
We strongly recommend that you speak to your equity release provider about your problems with your current equity release plan before asking to re-release equity.
It is possible that they will be able to resolve the problem for you without even switching your plan, or passing you onto another lender.
For example, if you need more money each month, your current provider may be happy to increase your monthly loan amounts. It is always worth checking this before jumping to more drastic measures, as it could save you time and money.
5. Is your partner happy to re-release equity?
If you took out equity with your partner in a joint application, you will need to ask them what their thoughts are on re-releasing equity before you make a decision. As you both own the property, re-releasing equity will affect the two of you, so you need to reach a consensus.
If you cannot come to an agreement, it may be helpful to meet with a financial adviser together.
That way, you get objective financial advice, and you can find out which route would be more sensible for both of you. The adviser may also help you to discover a compromise, such as switching equity release plans instead of getting a further advance.
6. Is the problem with the lender or the plan?
Some people think they are unhappy with their type of equity release, so they decide to change plans, only to realise their equity release plan provider was the problem.
Make sure you identify the specific problem before searching for a resolution, otherwise you could end up re-releasing equity and being just as disappointed with the scheme.
If there is a problem with your lender, you can contact the Equity Release Council (ERC) and make a formal complaint. All lenders should be following ERC guidelines, so they will be investigated and dealt with if they have not been doing this.
Please call our 24-Hour Helpline: 0330 058 1579
What are the Alternatives to Doing Equity Release Multiple Times?
If you want to re-release equity in order to get extra funds, there are other options you could explore before settling on your final decision.
Firstly, you could downsize, which would leave you with a larger retirement income. It is a myth that you cannot downsize as an equity release customer.
If you have downsizing protection, you can move to a smaller home without paying an early repayment fee. If the home is up to the equity release lender’s standards, you could even switch your equity release plan to this property at no extra cost.
Without downsizing protection, it would be more of a challenge to downsize, as you could end up paying an early repayment fee. However, plenty of lenders still allow you to do this, even if they do charge you for it.
Secondly, you could take out a traditional loan even though you already have an equity release loan. This would work well if you needed a small amount of money very quickly, and you are able to repay it by the deadline. Often, this is much more straightforward than re-releasing equity.
However, if you have no source of income other than your loan, we would not advise you to do this, as you could get into debt if you cannot afford to pay the money back in the proposed timeframe. This would be much riskier than re-releasing equity, as the latter does not require you to repay any money.
Another option would be to borrow money from someone you know well. Again, this could work if the amount of money was not high, and you knew that you would be in a position to repay it in the near future. You could avoid plenty of administration by doing this.
Yet, this option is not without complications, as it could put a strain on your relationship. You may also find that people are not willing to lend you money, especially as many of us are struggling more than usual with the current cost-of-living crisis.
Finally, find out whether you are entitled to any benefits or grants from the government. You may be lucky enough to find a grant that covers the exact expense you are trying to raise money for.
For instance, if you need money to cover your energy bills one month, you may find that you qualify for the Warm Home Discount Scheme (1). This gives you £150 off your electricity bill.
If there is not a grant for your situation, there may be means-tested state benefits that could help you with your finances consistently. For example, if you are claiming a state pension and you are on a low income, you could get Pension Credit (2).
You can read more about alternatives to equity release here.
Please call our 24-Hour Helpline: 0330 058 1579
FAQs About Re-Releasing Equity
Below, we try to answer some common questions about re-releasing equity:
1. Can I re-release equity with a new partner?
Yes, you can re-release equity if you have a new partner and you want to add them to your equity release plan. This could be a great opportunity to make the most of the benefits of a different equity release plan.
It also ensures you and your partner are both entitled to stay in your home in the event that one of you goes into permanent long-term care or passes away.
However, you do not have to re-release equity in order to do this. You could ask your lender to add your new partner to your plan, provided that they are eligible.
If your partner was younger than 55 years old when you took out equity, meaning they did not qualify for equity release at the time, they will not be allowed to join your plan.
2. What can I spend my money on when I re-release equity?
When you re-release equity, you do not have to tell your equity release provider what you want to spend the funds on. You will not be denied additional funds because of what you are putting your money towards.
If you are stuck for ideas on what to spend the extra loan on, you could consider: renovating your home, buying a new car, boosting your monthly disposable income, or going on holiday.
3. Is the eligibility criteria different for re-releasing equity?
Anyone who re-releases equity has already been approved as an equity release consumer, so in this sense, the eligibility criteria is the same.
This means you don’t have to worry about being rejected, as you already know that your age and your homeowner status are suitable for equity release.
However, one thing that could get in the way is any changes to the value of your property. It is a requirement for all equity release properties to be worth £70,000 or more.
If your home has become less valuable over the years, your lender is allowed to reject a re-release of a cash lump due to the market value drop. They will determine this through a property valuation.
Please call our 24-Hour Helpline: 0330 058 1579
Can You Do Equity Release More Than Once — Speak to an Equity Release Expert Today
If you are considering re-releasing equity, we assume that you already know all about the equity release scheme. However, if you did not spend much time with an equity release expert when you first took out equity, it’s not too late to get knowledgeable.
By speaking to a member of our team, you can access high-quality equity release advice, making you as informed as possible when you re-release equity. This will ensure you avoid equity release scams, and you benefit from the best equity release plan for you.
We will outline all of the possible options to you, including alternatives to re-releasing equity, so that you can choose the most profitable option.
Get in touch on 0330 058 1579 to discover the safest and most effective way to release equity a second time.
Whether it’s getting a further advance, switching plans, or releasing more funds from your tax-free cash reserve, we can explain the pros and cons of each method, as well as showing you how you can get started with each one.
If you are brand new to equity release, use our free equity release calculator to work out how much extra money you could release with a lifetime mortgage or a home reversion plan.
References
[1] Grants and benefits to help you pay your energy bills https://www.citizensadvice.org.uk/consumer/energy/energy-supply/get-help-paying-your-bills/grants-and-benefits-to-help-you-pay-your-energy-bills/
[2] Pension Credit https://www.gov.uk/pension-credit
