Money Matters

4 Concerns to consider when seeking equity release in the uk

Getting Your Equity Release While Living In The UK!

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Equity release is a new way of borrowing by using your home as security for the loan. Mostly, the credit is appropriate for people who are more than 55 years of age.

According to an article published on the Telegraph, they stated that most people are now considering signing up for this type of loan more than ever before. In their study, they also said that people released up to 870 million pounds for their home in 2018.

While these figures are staggering, one should be careful when seeking to acquire this type of loan. The individual should first understand what he or she is getting himself or herself to before signing any contract.

So, what are the concerns that you should keep in mind while considering Responsible Equity Release?


  1. Do you need the money?

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Primarily, the equity release is a loan like any other. Lenders will expect you to pay the capital and the interest at the end. The good thing about it is that the benefits usually remain constant over the lifetime of the loan.

Before you walk into any lending institution, you should ask yourself if you require the money or not. Think about what you intend to do with the money you get.

For instance, you can use it to pay a mortgage, to finance a project, or to help you cater for your medication if your health is wanting.

  1. Seek advice to understand the product

When we talked about research, this is where it applies. You have to think about getting a financial advisor to avoid frauds. In the UK, the Equity Release Council usually regulate independent advisors. The reason for its establishment was to reduce frauds.

Initially, most people would fall into traps where they would acquire loans that were more than the value of their homes.

Check the name of the firm, and if they are a member of the ERC, then you are sure that you will get the best advice on how to get the equity release.

  1. Consider a no negative-equity guarantee contract

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It is not new that people will accrue interests that go higher than the estimated value of their property. As much as the lender will not chase you out of the home, no matter how long you live, you should go for a lender that has a no negative equity guarantee.

In this agreement, which will be within the contract, the borrower does not have to worry about unpredictable market price changes.

That means the interests will not change even if the value of the house drops, which is a benefit to you, as the borrower.

  1. Understand the different requirements a lender will require

The problem with this market is that different lenders have a wide array of conditions; in other words, their demands will vary. As a way to ensure that you get the right lender, you have to ensure that you provide accurate and honest information about you and your ownership.

Be honest when you provide your medical report. It can either lower your interest rates or increase it depending on the information you relay to them.

Additionally, ensure that you have the right documentation inclusive of your title deed, proof of identification, among other documents. The information helps to satisfy the lender when they want to qualify you for the loan.

Final remarks

Understand that as long as you stick to the confines of the lender’s contract, you will not incur any penalties, whatsoever.

Therefore, with the help of your advisor, read the whole contract requirements before you sign it.


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