In this brief blog, we will cover what the minimum age for equity release is and what your options are if you don’t meet the minimum age for equity release.
What is the minimum age for equity release?
The minimum age to get an equity release product is 55 years old but if you are below the age of 55 you may be wondering what equity release alternatives you may be able to get.
If you are 55 and have another person who is below 55 who owns the property, you may still be able to get an equity release product but the other person may have to sign an occupancy waiver so the equity release provider can approve the mortgage.
Is there a maximum age for getting an equity release product?
Some equity release providers will have a maximum age of 85 or 95, although they may still offer you an equity release product, they will want to see that you are capable of making decisions and understand what you are getting into.
Alternative options if you don’t meet the minimum age for equity release.
There are a few alternatives if you don’t meet the minimum age for equity release. We highlight a few of them below.Some may be suitable for you and others won’t. You should always seek independent financial advice.
You could downsize your home
Selling your current home and buying a cheaper one may be a way to release equity if you don’t meet the minimum age requirements for equity release. This option could be particularly good if you have a home which is unmortgaged or you have a lot of equity in your home.
You should be aware that if you are buying your new home with a mortgage, you may need to pay fees such as conveyancing fees, stamp duty fees, mortgage arrangement fees and other mortgage associated costs such as mortgage broker fees if your mortgage broker charges a fee.
You could remortgage
Another way you could be able to get equity released from your house if you don’t meet the minimum age for equity release is simply to remortgage your property with a standard mortgage. Remortgaging your property is one of the key ways you can take equity out of it. You can remortgage with the same mortgage lender or a different mortgage lender.
Use other funding options
You may also be able to use other funding options if you are in need of some money but don’t meet the minimum age for equity release. This could be using personal credit cards, personal loans or even additional borrowing on your home such as homeowner loans.
Reduce your cost of living
Another sure-fire way to have extra funds if you don’t meet the minimum age for equity release is to simply reduce your monthly expenses.
You can do this by simply cutting down your costs or refinancing your existing debt commitments to a cheaper rate
Use your investment and savings
Another option when considering equity release but you don’t meet the minimum age for equity release then you may want to consider using funds from any savings and investments you may already have. This could be savings from a lifetime ISA or a similar type of investment.
Borrow from family or friends
If you are looking to get an equity release but don’t meet the minimum age for equity release then you may be able to simply borrow funds from your friends and family in the meantime and could then pay them back at the point you are eligible for an equity release.
Apply for benefits
If you are considering getting an equity release product but you’re not currently eligible because you don’t meet the minimum age for equity release then you could potentially claim some benefits.
There are many benefits which you may be eligible for based on your income, where you live, your age etc. You should always check to see you have claimed all benefits which you are eligible for as this could boost your income and be a good alternative to equity release.
You may be eligible for benefits such as pension or savings credit, council tax reduction or even disability benefits.
Use a retirement interest-only mortgage
If you want to get an equity release product but you do not meet the minimum age for equity release then you may be able to use a retirement interest-only mortgage.
A retirement interest-only mortgage is a more flexible product and an alternative to equity release schemes. Retirement interest-only mortgages are less strict than interest-only mortgages as the mortgage lender does not have strict guidelines on the repayment method or vehicle.
Retirement interest-only mortgages will usually let you borrow more than an equity release and will also require a small mortgage deposit.
Retirement interest-only mortgages can be repaid in three ways:
- By making interest repayments throughout the term of the mortgage and the capital is recouped at the end of the term when you die or move into a care home.
- By making interest and capital repayments throughout the term of the mortgage
- By deferring all interest repayments to the end of the mortgage at which point the home is sold to recoup the interest plus capital owed to the mortgage lender.
Use a mortgage broker for your mortgage in principle
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.