Equity Release - What Are The Minimum And Maximum Age Limits?
We get asked on many occasions what are the qualifying rules for equity release schemes. Here we outline the different age related critria for each company who can release equity on your behalf.
Equity release is specifically designed to enable retirees to release equity in their property to help ease their financial worries.
All these lifetime mortgage lenders have certain obligations to meet in order to qualify for their schemes.
You will therefore find that some equity release companies will accept your application, whereas other maybe wont.
This is why it is so important in obtaining the services of an independent equity release UK adviser.
Companies such as ourselves - Equity Release Supermarket can research the whole of the market on your behalf to find the best company & product to suit your requirements.
In order to ascertain which equity scheme is best for your circumstances we would initially conduct a personal financial review which would collate relevant information on your current situation.
Additionally, we would consider your alternatives to releasing equity & obtain your views & opinions on such topics as future property values plus how much equity you wish to leave your children etc.
Collecting these details assists our independent adviser establish which scheme suits you best
This could be one of two equity release schemes currently available.
These are lifetime mortgages & home reversion plans & both schemes have differing eligibility rules.
If the equity adviser considered recommending a lifetime mortgage then the minimum age requirement would be 55.
Nevertheless this does not apply to all the lifetime mortgage schemes. For instance with the current availability of lenders only Aviva, New Life Mortgages joint plan, Hodge Lifetime & two of the three schemes that more2life offer, are able to lend from age 55.
It is not until age 60 that lenders such as Just Retirement & LV= enter the market.
Furthermore, New Life Mortgage’s single life plan & the third of more2life’s plans do not commence until age 70!
So we now know the minimum age criteria. How about the maximum age for qualification?
Most lenders do not impose any maximum age on these schemes. Therefore, theoretically you could be over 90 & still apply for a lifetime mortgage scheme. We do not see many applications at this late stage, however it has been known for such reasons as inheritance tax planning.
This knowledge only takes into account the lifetime mortgage market.
Let’s now look at the home reversion options.
As home reversions schemes have a completely different set of rules to their counterparts, their age related criteria is different.
To recap, home reversion providers take a percentage of the value of the property in return for the cash lump sum or income.
This is usually taken at a discount, to counter the effect of them allowing you to live rent free in the property for the rest of your life.
Therefore, the scheme only works in their favour the older the applicant is & it is for this reason that home reversion schemes currently will only commence at age 65.
In essence, the older the applicant, the greater the lump sum you receive for the percentage of the property you sell.
However, we would only recommend that you take your initial requirements as money taken from equity release schemes & left on long term deposit in the bank is not usually good advice.
The three existing home reversion companies each have a different maximum age at application. The Aviva Home Reversion plan has a maximum age of 80, Hodge’s Shared Growth option is 85, whilst Bridgewater’s’ Home Reversion plans have a maximum age of 90+.
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ABOUT THE AUTHOR
Mark Gregory is the founder & director of Equity Release Supermarket who have been accredited 'Best Financial Advisers' at the Equity Release Awards 2008.
Mark is an experienced Independent Financial Adviser who has now been providing quality financial advice for the past 10 years.
Mark aims to pass on his experience in assisting the over 55's decide whether equity release schemes are the right choice for them.
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