Cornerstone Mortgages Limited offers independent, whole of market advice on Equity Release mortgages. We are fully qualified in this specialist area of lending and have many years of experience advising and arranging mortgages for older customers who need guiding through the process.

A full member of the Equity Release Council, we offer a free consultation and advice, please click any of the below links to arrange your free quote.

If you would like more information on how Equity Release mortgages work, please browse the information below. Click one of the links to submit some basic details in order to receive your free quote.

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What is Equity Release?

Equity Release Mortgages, also known as Lifetime Mortgages are designed specifically for older applicants, usually 55 years old or over. They offer the facility to borrow against your property when you may be too old or have insufficient income to be accepted for a standard residential mortgage.

We hold specific Equity Release qualifications and are authorised to advise on this specialist area of borrowing. We deal with all the major UK Equity Release lenders so if you would like to explore your options, please get in touch today for a free, no-obligation chat.

If you are not an older borrower and simply want to release some money from your property, you may want to move over to the Remortgages page.

What can Equity Release be used for?

The money can be used for any legal reason that you like. Some common reasons are below but feel free to add your own!

Repay current mortgage

If you already have a mortgage on your property this must be repaid when you take out a Lifetime Mortgage, with any remaining funds then being paid to you. For many people replacing their current mortgage is the primary reason that they take out a Lifetime Mortgage.

You may have a repayment mortgage with large monthly payments that you are finding hard to cope with, perhaps because of ill health or a reduction in income due to retirement. Replacing the mortgage with a Lifetime Mortgage could make a big difference to your finances.

Do you have an interest-only mortgage with a term that ends soon yet nothing in place to repay it once the term expires? One option is to sell your property and downsize in order to repay the mortgage. If you prefer however to remain in your beloved home then a Lifetime Mortgage may be the answer for you.

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Clear Other Debts

If you are struggling with other loans and credit cards then paying them all off with a Lifetime Mortgage could dramatically improve your financial position, freeing up your monthly income and giving you room to breathe again.

Helping out the next generation

A common reason for Equity Release is to give children or grandchildren a helping hand onto the property ladder by contributing towards their deposit. This means you get to see them enjoy their “inheritance” while you are still around!

Weddings are not cheap affairs and another commonly cited reason for releasing equity is to help pay for the big day, whether for children or grandchildren. Once again, this means you get to see them enjoy an early inheritance when they actually need it.

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Sometimes it’s all about me

As great as it is to hand out gifts towards your children’s new house purchase or wedding, at the end of the day you have spent a lifetime pouring money into your home and you are perfectly entitled to take some out to enjoy it yourself. It’s not all about paying off debts and tidying up your finances, maybe you just want to have some fun!

Many retirees take money out of their home to take their dream holiday, go on a world cruise or splash out on a fancy new car. After all, you have worked hard for the money which is locked up in your house and otherwise will never see it again.

You may prefer to use the money for more mundane but equally important tasks such as redecorating a tired older property, updating bathrooms and kitchens, or making your garden and house more accessible as your mobility perhaps deteriorates. Installing stair lifts, easy-access baths or showers and landscaping gardens to improve access are all common uses of Equity Release.

If you would like to raise money for something on the above list, or for any other reason you like – contact us today to discuss your needs with a qualified advisor.

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How is Equity Release different from a standard mortgage?

Firstly, it is important to understand that an Equity Release mortgage is still a mortgage. It does not involve “signing over” your property to anyone, you will remain the owner just as before. You are simply taking out a loan which is secured against the value of the property. There are however several important differences in the way the mortgage is assessed and how it works:

Age, not income

With normal residential mortgages, the more you earn the more you will be able to borrow as you can afford higher repayments. As your age increases, the amount you are able to borrow reduces as all lenders have a maximum age so the older you are the less time you will have to repay the loan.

With Equity Release the opposite is true. When calculating the amount you can borrow, your income is not taken into account at all. The only factors that determine your maximum loan are your age and the value of the property. The older you are, the more you can borrow. Don’t worry if this sounds confusing, read on for a full explanation!

Loans are based on a percentage of your property value, so for example a 60 year old may be able to borrow 30% of their property value whereas a 70 year old may be able to borrow 40%.

The minimum age is usually 55 years old and many lenders will accept applications up to the age of 95.

Roll up roll up

Another major difference is that there are no monthly payments with an Equity Release mortgage. This is the reason that your income is not of importance to the lender as they do not need to assess your ability to keep up with the payments.

The interest that the loan accrues is simply added on to your loan balance, or “rolled up” with the loan. This means the loan grows each year, speeding up a bit as time goes on, as with each subsequent year you will also then be paying interest on the previous years’ interest. The interest rate is fixed for the duration of the mortgage with most deals.

This is also the reason why your age determines the amount you can borrow. As the lender does not want the loan to ever exceed your property value they will base the maximum loan on your likely life expectancy. The older you are, there is potentially less time for interest to accrue and so they will be willing to lend you more at the outset.

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Repaying the loan

Your loan only has to repaid when one of the following happens:

• The death of the final borrower
• When the final borrower moves out into long-term residential care

Until one of these happens, you are guaranteed to be able to live in the property and retain ownership. Once the final borrower either dies or moves out into a care home then the property will be sold and the loan repaid. Any money left over belongs to you, or your beneficiaries in the event of your death.

No Negative Equity Guarantee

All Equity Release mortgages come with this guarantee which means that you will never have to repay more than the property is worth. If you manage to live into your 100s and the loan has grown beyond the house value, all the lender will get is what the house sells for. The rest gets written off. Equally, if property values have dropped dramatically by the time you die the lender will bear the brunt. This means you can never leave a debt behind for your loved ones to deal with and the debt will always end with the sale of the property.

Credit History not an issue

As no payments are required, a poor credit history is not usually an issue for Equity Release. The reason for this is that your track record of keeping up with payments isn’t seen as important since you don’t have to make any payments!

If you would like to discuss your options or have any further questions, please get in touch today to speak with a qualified advisor.

Click here for free Equity Release Advice

Extra Features

Many products offer additional features and benefits that may be useful for your particular situation. Your advisor will discuss all the options with you to make sure that the best product for your individual circumstances is recommended.

Guaranteed Inheritance

Some lenders offer this feature which means you can “fence off” some of the equity in your property so that you guarantee a certain amount of inheritance will be left after the mortgage is paid off.

If for example the maximum loan on offer is £100,000 and you only borrow £60,000 then a product with this feature would guarantee that 40% of your property value is protected, i.e. the maximum the lender will get repaid is 60% of your property value when it is sold.

Optional Payments

Although you don’t have to make any payments, some lenders have products that allow you to pay some or all of your interest, or even make overpayments to reduce the capital you owe. Utilising this feature can slow down the growth of the loan size, stop it growing altogether or even reduce the size of the loan if you are able.

Drawdown Option

If you don’t need all the money in one lump sum then some deals allow you to be approved upfront for the total amount needed but then “draw down” the funds in stages. This has the benefit of meaning you only start paying interest on the money you have drawn down and so can slow down the growth of the loan as opposed to taking the whole amount in one go, even if you may not need it all just yet.

Enhanced Loan Amounts

As the maximum loan available is based on your anticipated remaining life expectancy, your lifestyle and medical history can allow some lenders to offer a higher, “enhanced” loan amount. Conditions that could potentially increase the amount a lender can offer are things such as high blood pressure, heart disease, cancers, strokes, high BMI, heavy smoking etc.

If you would like to discuss any of these options, please get in touch and a qualified advisor will give you a call for an initial chat.

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Is Equity Release right for me?

Lifetime Mortgages are not always the right solution and there are a few things you should consider carefully before deciding to go ahead.

Alternative Options

As Lifetime Mortgages are an important and long-term commitment it is important that you have considered all other options available to you:

• Savings – If you have savings then you should always consider using them first before you take out a Lifetime Mortgage.
• Unsecured lending – It may be better to borrow the money you need with a standard unsecured bank loan if you are able to afford the payments.
• Standard residential mortgage – your advisor will consider all the other lenders and mortgages available before recommending an Equity Release mortgage. Only once all other options have been fully explored will a Lifetime Mortgage be recommended.

Means Tested Benefits

If you are in receipt of certain means-tested benefits then suddenly having a big lump of money deposited into your bank account may adversely affect the benefits you receive. It is important that your advisor checks that releasing money will not have any negative effects on you.

Inheritance implications

As the loan will grow over time, the amount left over for your family members to inherit will be reduced. You may be releasing the money to help out those very family members, but it is important that you and they understand the implications.

Although not compulsory, it is always recommended that you discuss your Equity Release plans with your close family to make sure they are aware of what you are doing and there are no surprises when your house comes to be sold.

If you would like to discuss your options, any concerns or questions that you may have, please get in touch today to speak with an expert.

Click here for free Equity Release Advice