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At Equity Release Warehouse, it is our aim to make sure that everyone gets the best equity release plan for them and their family.
We are dedicated to making sure that our clients are offered the best plans and interest rates, which is why we have taken out a Halifax equity release review.
Equity release is a very common type of loan used by homeowners aged 55 or over throughout the UK.
When you opt for equity release, you are given some of the equity in your home tax-free. In return, you pay interest on your loan and repay the loan after you pass away and your next of kin sell your house [1].
Equity release is such a popular option because you are able to spend the money however you want. You can choose to spend the money on yourself, on home improvements or on loved ones, including the grandchildren [1].
There is no one set amount of equity people are able to release, as this depends a lot on how old you are, how healthy you currently are and how much of your mortgage you have paid off.
The equity release lenders prefer it if you have already paid off your existing mortgage, but they also accept that this is very rare these days given the economic climate.
Instead, they will allow you to take out an equity release loan as long as you use some of the funds that you receive to pay off the remainder of your pre-existing mortgage.
Equity release can help you if you are struggling to enjoy your retirement due to lack of savings or the increasing cost of living. It might also be able to help your family and loved ones, as you are allowed to use the money to help them with any house deposits, debt or university fees.
There are two main types of equity release plans, known as lifetime mortgages and home reversion plans.
Lifetime mortgages are the most popular type of equity release across the UK. With a lifetime equity release mortgage, you can release a set amount of equity from your home without having to make any regular repayments.
In fact, you only have to repay the loan after you pass away and your house is sold. The money from the sale of the house will go towards paying off the equity release loan, so that you do not have to.
All money that you get from a lifetime equity release mortgage will be sent to your bank account directly, tax-free. However, once you receive that money you will also be charged interest on your loan.
This interest will unfortunately build up into compound interest, which will then increase the total value of your loan which you will then be charged more interest on.
As you can imagine, this will affect the total loan amount and therefore how much money you will have to pay off once your house is sold. In turn, this means that if you do not pay off any interest on your loan, then the amount of inheritance you leave your loved ones might be reduced.
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During our Halifax equity release review, we found that home reversion plans are a lot less popular than lifetime mortgages across the industry.
When you opt for a home reversion plan you have to sell a percentage of your home to the lender in return for your equity in cash. This means that when you sell your house, a percentage will go to the lender, as opposed to your next of kin.
You will only be accepted for a home reversion plan if you are over 60 years old and have paid off a big chunk of your mortgage already.
During our Halifax equity release review, we learned that Halifax used to be called the Halifax Building Society and now operates throughout the UK as a bank. Halifax pride itself on having its clients’ best interests at heart.
They understand that a mortgage and equity release loan is a huge commitment for you and your family. They understand that people save their money for important things, such as a first house, a wedding or a holiday.
Because of this, they take your money and your business very seriously [1]. After all, at Halifax, it’s a ‘people thing.’
Halifax is one of the biggest and most popular lenders throughout the UK. They are also one of the major lenders when it comes to people aged over 55 years old.
Halifax does not offer its own equity release loans. Instead, they partner with Scottish Widows [1,2].
However, back in 2011 Halifax became a popular lender due to the release of its Halifax Retirement Home Plan.
This was a hugely popular loan used by people aged 65 or over across the UK. By opting for this loan, individuals were able to release at least £15,000 from their homes with low and fixed interest rates. However, this type of loan did not last long, and it ended in August 2011 [1].
During our Halifax equity release review, we discovered that the only type of loan Halifax offers which is similar to this is the Halifax Hodge Retirement Mortgage.
However, this type of loan is based on your level of income as well as the value of your property. However, individuals are limited to releasing 50% of the value of their property [1,2].
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Halifax is a lender who does not offer their own equity release products. Instead, they partner with other lenders such as Scottish Widows who do offer their own equity release plans.
In order to qualify for one of these equity release plans, you will need to meet all of the following qualification criteria.
For example, you will need to be aged at least 55 years old and own your own home in the UK worth at least £70,000. You must be living on the mainland, and must have paid off a lot of your mortgage already.
You must only have two people in total on the deed to the property, and this property must be your main residence. When you first enquire about an equity release loan you will sit down with an equity release advisor for their professional opinion and recommendations.
If you would like more information on equity release loans in the UK, then you should speak to a member of the Equity Release Warehouse team for more information on how equity release works.
Please call our 24-Hour Helpline: 0330 058 1579
During the Halifax equity release review, we found that Halifax does not offer their own equity release loans. Instead, they partner with other providers who they are happy to put you in touch with.
Whilst Halifax does not offer their own equity release loan, you will need to speak to a member of the Equity Release Warehouse team about how much equity release costs.
When it comes to equity release, there are a number of set up costs involved that not everyone will know about.
For example, this includes things like the cost of a solicitor, an advisor and someone to come to value the property. If it has been a long time since you took out a mortgage on a house, then it is easy to forget about things like this.
This is why it is incredibly important to choose a qualified equity release adviser, so that they can remind you of these costs and explain why they are necessary.
During our Halifax equity release review, we found that these initial costs can add up to anywhere between £1,000 and £3,000 but this will depend on your personal circumstances.
On top of this, you must remember that from the second you receive your loan amount, you will be charged interest. You can either choose to pay off this interest as you go, whilst you are still alive. Alternatively, you can choose to leave this interest and allow it to build up.
However, it is worth noting that this will turn into compound interest and end up costing you a considerable amount more money in the future. This will also mean that you will leave less inheritance to your loved ones.
Please call our 24-Hour Helpline: 0330 058 1579
If you are looking for a quick way to get your hands on some more cash, then equity release is not for you. Just as with any mortgage, the process takes time.
Depending on how quickly you need the money, equity release might or might not be for you. For example, if you need the equity release loan in order to pay off some debt urgently, then you might want to consider other options.
There are a number of different steps and stages to equity release, which is usually the same across all lenders.
The first stage is to talk to an equity release advisor from Equity Release Warehouse, who will be able to guide you on how equity release works and what kind of plans you would be best suited to.
You will be given the chance to talk to an adviser a number of times and will also be asked to give yourself some time to think before you have to make a decision.
It is important to remember that there is never any rush with these things. Releasing equity from your home is a huge decision and is not one that should be taken lightly.
If you decide that you want to go ahead, then you will need to engage a solicitor and send off your application form with the help of your Equity Release Warehouse adviser.
Your property will then be valued in order to assess how much money it is worth and how much equity you are allowed to release.
Your adviser will have drawn up a mortgage illustration, and your solicitor will also write up a contract. When your application is approved it will take a few weeks until the equity release money is sent directly to your account, tax-free.
Please call our 24-Hour Helpline: 0330 058 1579
During our Halifax equity release review, we discovered that Halifax does not offer any equity release plans themselves, and they also do not have their own equity release calculator.
However, if you are wondering how much money you might be able to release, then you should use the equity release calculator at Equity Release Warehouse which will give you a clear and accurate picture.
Equity release calculators have been used for years to help people to gain a better understanding of how much money you are able to release from your home, based on a number of factors including the value of your property, your current age, your health status and how much money you have already paid off of your traditional mortgage.
If you would like more guidance on how much equity you are able to release from your home, then speak to our team at Equity Release Warehouse who will be able to use our own equity release calculator to establish how much you can release from your home.
Please call our 24-Hour Helpline: 0330 058 1579
If you are considering equity release, then you might be wondering whether there are any restrictions on how you can spend your money. You will be pleased to hear that there are very few restrictions when it comes to this.
For example, you are allowed to spend most equity release plans on paying off your existing mortgage if you still have one. Most lenders do value it more if you have already paid off your mortgage before you apply for your equity release loan in the first place.
However, others will accept you for the loan as long as you agree to use the money to pay off your existing, traditional mortgage.
If you suffer from any debt, then there are also very few restrictions when it comes to using your equity release money on this. You are able to pay off any unsecured debts with your money. However, it is recommended that you speak to a financial adviser before doing so, to make sure that you are making sensible decisions.
Others hope to spend their equity release funds on home improvements. At Equity Release Warehouse, we think this is a great way to spend your equity release money and know of no restrictions put in place by lenders in order to do this.
By improving your home, you will also be increasing the value of your house and subsequently the amount of money you are able to pay back when you pass away and leave to loved ones as inheritance.
There are also no restrictions when it comes to gifting your money to loved ones to help with their financial situation. For example, lots of people with grandchildren choose to give their money to them, to help with a deposit on a house or university fees.
If you are hoping to do so, we always recommend that you speak with a qualified financial adviser first, before making any decisions. They will ensure that you fully understand how the loan works, that you are making an informed decision and that your choices are sensible.
Please call our 24-Hour Helpline: 0330 058 1579
During our Halifax equity release review, we found that although Halifax do not offer their own equity release plans, their partners at Scottish Widows do and they also allow you to repay some of your equity release loan early.
How you choose to repay your loan will have a huge impact on how much inheritance you are able to leave your loved ones after you pass away.
For example, if you choose to repay the interest on your loan whilst you still live, then the overall loan amount will be reduced and your loved ones will have more inheritance after the sale of the house.
However, if you choose to ignore the interest on the equity release loan and allow it to build up into compound interest, then this will subsequently increase the overall loan amount and therefore the amount repayable by the time you pass away and your loved ones come to sell the property.
When you do pass away or move into long-term care and the loan becomes repayable, your family, next of kin or even solicitor will be responsible for notifying the equity release lender. Your adviser or lender will then explain to your loved ones and next of kin what the next steps are.
This is why it is highly important to inform and involve your next of kin in the equity release process so that they are fully aware of what they need to do once you pass away or move into long-term care.
If you or your loved ones want to know exactly how much equity you will need to repay through the sale of the property, then you will need to ask your equity release lender and adviser for access to a thing called your redemption statement.
This statement will be sent to you at the time of either application or completion and will highlight how much equity the individual released and how much will be repayable by the time of death.
According to Halifax and Scottish Widows, once the individual and homeowner passes away, the next of kin is allowed a year until they have to repay the equity release loan.
This means that the house will need to be sold within this time frame and exchange and completion have taken place.
Every lender is required to ensure that they include a no negative equity guarantee as part of all of their equity release products.
This means that when you pass away and come to sell the property, even if the property has decreased in value and no longer covers the equity release loan amount, your next of kin will not be expected to cover the difference.
This is a fantastic feature of all equity release plans, and is heavily regulated by the Equity Release Council to ensure that this feature works properly and is honoured throughout the equity release industry.
Please call our 24-Hour Helpline: 0330 058 1579
The best thing about equity release for some people is that you do not have to repay a penny of your loan whilst you are still alive, not if you do not want to or are not in a position to.
However, by doing so you should now be well aware that any interest on the loan will compound exponentially. This is why some people who take out an equity release loan do choose to repay their loan early. However, it will always remain just that – a choice.
There are no rules as to when you can choose to start paying off some of the interest on your loan. However, depending on what type of equity release loan you took out and who your lender is, you might be charged an early repayment charge, often referred to as an ERC.
Unfortunately, a lot of equity release lenders will charge you an ERC if you repay your loan early. This is why you should always ask your equity release lender if this is the case on your loan, as it will make a huge difference to the overall loan amount.
Lifetime mortgages are known as some of the most flexible equity release loans, as they often allow you to repay your interest early, although some lenders do not allow it.
At Scottish Widows, you might be able to pay back some of the interest on your equity release loan early, depending on your type of loan and current situation.
If you have currently taken out an equity release loan or are considering doing so but are worried about early repayment charges, then speak to a member of the Equity Release Warehouse team for advice and support on what you can do.
Please call our 24-Hour Helpline: 0330 058 1579
As Halifax does not offer their own equity release loans, they do offer alternatives. These alternative loans are good options if you are struggling to pay off debt such as store credit or credit card debt. If this is the case, then you might want to consider taking out the Halifax Consolidation Loan [3].
This type of loan is used by thousands of people across the UK as their solution. The idea behind the Halifax Consolidation Loan is that you consolidate all of your different debt to one debt, which is the new loan.
By doing so, the interest rate on this loan will be less than the interest rates on your previous credit cards or store cards, meaning that it is also more affordable, too.
In fact, the Halifax Consolidation Loan allows you to take out the loan and borrow certain amounts depending on exactly how much debt you have, and will offer you a set APR rate to reflect this. They will also take into consideration whether or not you are already a customer of theirs.
During the Halifax equity release review, we found that the Halifax Consolidation Loan allows you to consolidate up to £25,000 worth of debt, which is a staggering amount. If you are already a Halifax customer then this number increases to £35,000 [3].
However, Halifax does state that if you are suffering from any more debt, then you might want to seek help elsewhere through a financial adviser or debt adviser.
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As Halifax do not offer any equity release loans themselves, they are not a member of the Equity Release Council.
However, if you are considering taking out an equity release loan with Scottish Widows or any other type of lender, then you will need to check that they are a member of the Equity Release Council before you commit to your loan.
The ERC helps to standardise the equity release industry, ensuring that all plans and products are fair and transparent.
According to the ERC, approximately 90% of the industry is a member of the ERC, highlighting how important and necessary it is for lenders and borrowers alike [4].
Whilst many equity release advisers charge you for initial help and support, at Equity Release Council we are proud to say that your initial consultation with us will be for free.
If you are considering taking out an equity release loan with Scottish Widows, Halifax or anyone else, speak to our friendly and helpful team. We will be able to advise you on the best lender and products in the market now, and will also be able to explain how equity release works in more detail.
If you want our help and advice, then speak to our friendly and professional team on 0330 058 1579 or by visiting our website at www.equityreleasewarehouse.com for more information.
[1] https://www.halifax.co.uk/mortgages/equity-release-mortgages.html
[2] https://www.halifax.co.uk/who-we-are/inclusion-and-diversity.html
[3] https://www.halifax.co.uk/loans/what-you-can-borrow-for/debt-consolidation.html
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CALCULATE NOWWe are hear to answer all of your equity release FAQs. Clear any confusion with this list of commonly asked questions and their answers.
Learn MoreThere are two kinds of equity release plan, and these are lifetime mortgages and home reversion.
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