Category: Mortgages

If you’re considering equity release to plan your retirement or boost your finances, choosing one of the best rates on the market is vital.

Equity release allows UK homeowners aged 55 and over to unlock or access some of the money built up in the value of their homes over the years.

According to the latest market report from the Equity Release Council, the lowest advertised rate in October 2024 was 5.62% (MER), while the average advertised rate was around 6.9% (MER).

The rates are fixed for life, with most customers preferring lifetime mortgages, which make up over 99% of the market.

But who offers the best equity release rates? Comparing equity release rates from different providers in the market can help you identify the best deals.

Read on to discover who offers the best equity release rates in the UK and how equity release rates work.

Who Offers the Best Equity Release Rates?

There are plenty of equity release companies in the UK, ranging from high-street names to specialist providers. Almost all companies offer lifetime mortgages with different features and flexibilities since they’re the most popular equity release product.

Below are some of the companies offering the best equity release rates. They’re all members of the Equity Release Council (ERC) and are regulated by the Financial Conduct Authority (FCA).

Aviva

Aviva is one of the oldest equity release companies in the UK. It has helped homeowners release over £7 billion from their homes since 1998 through its equity release products and services.

The company is well-known for its range of pension and insurance products and has won several awards for its equity release products.

You can access two types of lifetime mortgages through Aviva. These include the lifestyle lump sum max and the lifestyle flexible option.

You can release a single, one-off lump sum with the lump sum max. The flexible option allows you to release an initial lump sum and set up a reserve fund, which you can draw from in the future.

Equity release rates from Aviva range from 5.51% to 5.90%.

Just Retirement

Just Retirement is a renowned equity release company with a strong presence in the post-retirement marketplace.

It has traditionally offered retirement income through annuities, but they’ve branched out to providing lending options through equity release schemes.

The company also funds the equity release products of other firms.

You can access various types of equity release products through Just Retirement. These include traditional roll-up lifetime mortgages, drawdown lifetime mortgages, interest-only lifetime mortgages and lump sum and enhanced equity release plans.

The company also has experience in medical underwriting, and you can get a higher maximum lump sum if you’re in poor health.

Equity release rates from Just Retirement range from as low as 5.39% to as high as 8.49%.

Canada Life

Canada Life has been in the UK since 1903 and is a leading investment, retirement and protection products provider.

It only got into the equity release market in 2018 after acquiring Retirement Advantage and works with advisers to help individuals, families, and businesses build more robust and financially secure futures.

With Canada Life, you can choose flexible lifetime mortgages with capital select and lifestyle select options.

You can take out a lump sum or choose a drawdown with a cash reserve to access money later. Other features include the flexibility to pay up to 10% annually and inheritance and downsizing protection.

Equity release rates from Canada Life range from as low as 5.67% to as high as 7.93%.

LV= (Liverpool Victoria)

Liverpool Victoria, which operates under the brand name LV=, has existed since 1843 and offers a range of insurance and retirement products.

It provides services directly to customers or through independent financial advisers, brokers, and strategic partnerships with other organisations.

The equity release options you can access with LV= include lump sum or drawdown mortgages.

The products are available for your primary residence, but they can also consider holiday homes and second homes. You can expect various guarantees since LV= is a mutual company that offers plans that are in the customer’s best interest.

Equity release rates from LV= range from as low as 5.64% to 7.36%.

More2Life

More2Life has rapidly grown since its launch in 2008 and is now a leading specialist lifetime mortgage provider. You can only access their equity release plans through specially selected brokers like Equity Release Supermarket.

The company offers various lifetime mortgages to cater to different individual needs, including flexi-choice plans, tailored choice plans, maximum choice plans, capital choice plans and prime choice plans.

They all have flexible features like voluntary repayments, inheritance protection, and fixed early repayment charges.

Equity release rates from More2Life range from as low as 5.74% to as high as 8.64%.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

How Do Equity Release Rates Work?

Equity release rates usually work by compounding since lifetime mortgages don’t require you to make any monthly payments.

The principal amount you borrow accumulates interest every month. This interest is then added to the principal. The new principal accumulates even more interest the next month, creating compound interest.

Since you’re not making any payments as the months go by, your total debt increases every month and can grow exponentially, especially if you live for a long time.

Repayments for equity release debts, which include the loan amount plus interest, usually become due when you die or move into long-term care.

The table below shows how an equity release rate of 5% would work if you take out a lifetime mortgage with a lump sum release of £30,000 and don’t make any monthly payments.

What Factors Affect the Equity Release Rate You Get?

Factors that will impact the equity release rate you get include:

The Loan to Value (LTV) Ratio

In standard mortgages, the LTV refers to the ratio of how much you can borrow versus how much deposit you have. In equity release, it refers to how much equity you can unlock or take out of your property.

The amount you wish to release as a percentage of your property will impact the interest rate you get. Generally, the closer you get to the available maximum, the higher the equity release rate.

The Property

Various properties may attract higher equity release rates. Lenders can consider factors like the property’s condition, location, or whether it has the potential to increase in value when determining the rate.

If your property falls below the lender’s ideal criteria, you may get a higher rate to reflect the risk involved since it can be challenging to sell in the future.

Your Health and Lifestyle

Believe it or not, poor health or an unhealthy lifestyle can be a plus in equity release. The longer you stay on the property, the longer it will take for the lender to receive repayment, so your life expectancy and health are vital.

The lender only makes a return when you pass away or go into a long-term care facility. You can qualify for better rates and higher amounts if you have a health condition or lifestyle habit that will reduce your lifespan.

Product Features

Providers usually offer different features on their equity release products. Products with extra features may mean paying a premium through higher equity release rates.

Such features can include inheritance protection, which ensures your beneficiaries inherit some property value, or fixed repayment charges that don’t change no matter how much you repay.

Plans with fewer features may have lower rates, so carefully consider the features you want and whether they’re worth the higher rate.

What Do AER and MER Mean in Equity Release Rates?

You’ll likely see a lot of MER and AER when comparing equity release rates. AER is the annual equivalent rate, representing the interest rate added over one year. MER stands for monthly equivalent rate, which refers to the interest rate added over the year but divided over every month.

The MER is usually lower and is useful when the interest compounds, like in a lifetime mortgage with no monthly payments.

How to Secure the Best Equity Release Rates?

Strategies that can help you secure the best rates include:

• Shopping around – Compare offers from different lenders to identify the most favourable rates.
• Consulting and adviser – A qualified equity release adviser can help you compare deals from the entire market and tailor advice to your unique situation.
• Negotiating – Instead of accepting the first offer, engage the provider to see if they can offer better rates.

Final Thoughts

Locking in the best rate you can is vital since it can significantly impact how much interest you pay over time.

Ensure you consult an adviser and compare offers from different providers to identify who offers the best equity release rates in the market.

Sources and References:

• https://www.aviva.co.uk/retirement/equity-release/equity-release-calculator/

If property is your most significant or only asset, equity release can be an option for accessing tax-free cash.

It allows you to leverage the value of your home if you’re aged 55 or over and need a lump sum or regular income to cover a range of purposes.

More people are unlocking equity to financially plan for retirement, with lending figures showing UK homeowners accessed over £600 million through equity release in the third quarter of 2024 alone.

While equity release can be appealing, it’s a significant decision with various risks and long-term implications. You must carefully weigh the benefits and limitations and consider other viable options before deciding.

This guide looks into the pros and cons of equity release to help you determine if it’s suitable for you.

What are the Advantages of Equity Release?

Equity release offers various advantages. These include:

Tax-free Cash

Equity release is essentially a loan, meaning it’s not taxable. It’s exempt from taxes that apply when you receive money through regular income and other means like interest from savings. You can spend the money you release however you like without restrictions.

It can be a lifesaver if you don’t have adequate savings or a sufficient income to cover living expenses in later life. Common uses of released funds include:

Consolidating and paying off debts like personal loans, credit cards, or an outstanding mortgage

Making up pension shortfalls so you can have additional retirement or disposable income and have a better quality of life

Funding one-off expenses and lifestyle purchases like buying a new car

Meeting homecare costs like adapting and improving your home so you can live in it independently for longer

Paying for help around the home, such as domiciliary social care

Gifting a ‘living inheritance’ to your family or friends, including paying for a house deposit or university education for a child or grandchild

No Need to Move

With equity release, you don’t need to sell your home and move to access funds.

It allows you to retain your home ownership for life or until you need to move into long-term care. However, the property must remain your primary residence, and you must abide by the terms and conditions of your contract.

It can ensure you don’t uproot your life in your later years by leaving the home and community you already know and love. You also don’t have to deal with the stress and expenses of moving.

No Monthly Repayments

Unlike other borrowing options, you don’t need to make monthly repayments on the money you release or its interest if you don’t want to.

The loan and any outstanding interest are repaid by your estate when you or your partner in a joint policy either die or move to permanent care.

This ensures your monthly outgoings stay low without impacting your disposable income, and you don’t have to worry about the lender chasing you for payment. You can repay the loan or interest monthly to keep the debt down, but it’s not mandatory.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Negative Equity Protection

Taking out an equity release product with a lender registered with the Equity Release Council (ERC) protects you from negative equity.

Under the guarantee, neither you nor your estate will be liable to pay any more when your property is sold, and the amount is insufficient to repay the outstanding loan, plus interest, to your provider.

It protects you from negative equity by ensuring you never owe more than the total sales price of your home, even if property prices fall.

Always look out for the ERC endorsement mark or logo to ensure you deal with an ERC member. You can also confirm membership credentials or search for a member operating in your area through the ERC website.

Access to Money When You Need It

Equity release products like lifetime mortgages have a drawdown feature that allows you to get the money you release in smaller amounts regularly or when you need cash. It offers more flexibility and can be more cost-effective than taking out the money in one lump sum.

Interest only applies when you withdraw the money, so you can get lower rates with a drawdown plan if rates fall. You’ll also pay less interest over time, so consider taking as little as you need first and waiting as long as possible before adding to the debt.

What Are the Disadvantages of Equity Release?

Equity release also features some drawbacks you need to consider. These include:

Interest Accumulation

If you choose not to reduce the interest monthly, it will accumulate and increase the size of your debt, especially if the equity release doesn’t end for an extended period. Due to the effect of compound interest, the amount you owe will increase monthly.

You should also note that the interest rate is usually higher than the top rate of standard residential mortgages. Making monthly repayments can help reduce the size of your debt and prevent the interest from compounding rapidly.

Reduced Inheritance

Equity release can involve converting some of your property’s value to cash or selling all or a percentage.

This will reduce the value of your estate, meaning you’ll leave less for your beneficiaries. Since repayments usually involve selling the house, your family won’t be able to inherit it.

They’ll only receive the balance left from the sale proceeds after the executor pays the equity release debt and the solicitor and agent fees.

You May Lose Some Benefits

Unlocking the equity in your home can increase your income and impact your current and future eligibility for means-tested benefits. Such benefits include Pension Credit, Universal Credit, or Council Tax Support.

Equity release can also affect the amount you’re entitled to, so discuss its impact on benefits with your adviser when applying. Even if you’re not getting benefits now, you may need them in the future.

Costs and Fees

Equity release also features various fees and costs in addition to the interest. Depending on the provider, they can include advice, valuation, application, and legal fees. The total fees can reach between £2,000 and £3,000, but providers can waive some of them.

You may also face early repayment charges if you exceed the monthly interest payment threshold the lender sets. The charges can vary between providers, so ensure you review the terms and conditions of the agreement before overpaying.

Reduced Equity

Your equity in the property immediately reduces when you take out an equity release product. The more funds you release, the further your equity decreases, which can impact your financial prospects in the future.

For example, taking out another loan using the property as security may be impossible. However, your provider can agree to further advances or extensions on the existing plan in the future.

You May Get Less Than the Market Value

If you choose to unlock equity with a home reversion, you’ll get much less than the market value of your share of the property.

Home reversions are a less popular way of equity release, and they involve selling all or part of your home to a provider at below-market value.

Lenders usually pay less because they’ll have to wait many years to get their money back. If you must release equity, choosing a different product, like a lifetime mortgage, is recommended.

Are Equity Release Products Regulated?

Yes. The FCA regulates all equity release products. This means that anyone advising and providing these plans must meet clear standards, and the FCA will act if they fail to meet them.

The regulations require all advertisements or literature on the products to be fair, transparent, and not misleading.

Customers must get disclosures or documents that help them understand any recommended products and services and compare them with others if they choose to.

Regulations also require advisers to have specific qualifications for the products they’re advising on.

They must also follow a process that ensures you have explored all other options and that any recommendation considers your full circumstances and needs.

Why Should You Choose A Provider with ERC Membership?

Providers who are ERC members take a pledge to deliver high standards in the advice and provision of equity release.

The standards protect you and ensure you get the best possible outcome, whether you’re dealing with a lender, financial adviser, or solicitor.

They ensure you get a clear and complete presentation and explanation of your equity release plan.

They must also inform you about the benefits and limitations of the plan, together with your obligations under the terms of the contract. The adviser or equity release provider must give you information about:

• All the costs involved in setting up the plan
• The implications of the plan on your benefits or tax position
• What will happen if you wish to move to another property
• How changes in house values may affect your plan

Final Thoughts

Equity release has various benefits if you’re looking to leverage the value of your home for tax-free cash in your retirement.

However, it also features multiple risks and drawbacks you must consider before entering an agreement. Ensure you get independent financial and legal advice to determine whether it suits your circumstances and long-term needs.

Sources and References:

• https://www.aviva.co.uk/retirement/equity-release/equity-release-calculator/

If you’re 55+, equity release can help you leverage your home to get the funds you need without selling or moving.

You can release money for various purposes, from one-off expenses and lifestyle purchases to boosting your retirement income and covering homecare costs.

The latest market report shows that between July and September 2024, homeowners over 55 released £615 million of property wealth from their homes. Almost all consumers prefer to use lifetime mortgages for equity release, and it makes up 99% of the market.

Under the rules, you don’t have to make any repayments within your lifetime unless you choose to. But what happens to the loan after you die?

What should your beneficiaries or executors take care of? This guide explores how equity release works when you die and the process of repaying it.

What Happens to Your Equity Release When You Die?

When you die, the outstanding equity release debt and accrued interest becomes due for repayment either by selling the property or through other funds from your estate or beneficiaries.

Your next of kin or solicitor must inform the equity release provider of your death as soon as possible.

When you first take out an equity release, the provider will give you a welcome package with contact details and a plan reference number.

The number is important since your beneficiaries or executors must quote it when dealing with the lender. Ensure you keep it somewhere safe and known to your executor or beneficiary.

Who Repays the Equity Release?

Your estate’s executor will be responsible for repaying your equity release, and they must apply for a probate grant to gain legal authority over your estate when you die.

Once the lender is informed, they’ll request the death certificate and probate document so they can contact the executor directly.

The lender will contact the executor requesting information on how they plan to repay the loan. In most cases, it involves selling the property, so the lender may ask for sale particulars and monitor the progress of the sale.

Once the sale goes through, the executor will use the proceeds to repay the equity release debt plus the estate agent and solicitor fees. Any balance will go to the beneficiaries as instructed in your will.

How Does Equity Release Work If You Have a Surviving Partner?

If you’re in a joint equity release plan, it must include both of your names to ensure your partner can continue living on the property after you die.

The lender will ask for the original death certificate. They’ll return it after noting the death in their system, and no further action is necessary.

Your surviving partner will continue living in the home, and the equity release will end once they die or move into long-term care.

They can also move if they want to, provided the lender agrees that the new property is enough security for the existing equity release.

Remember, if the surviving partner isn’t named in the equity release plan, they may be forced to move out so the property can be sold to repay the debt.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

How Quickly Must the Equity Release Be Repaid?

Most lenders allow up to 12 months after you or the last plan holder dies for the executor to repay the equity release debt.

This offers enough time to arrange the property sale for a reasonable market price and get the proceeds to settle the loan.

However, timeframes can vary depending on the lender, so it’s advisable to check the terms of your contract. The loan will remain outstanding and continue to accrue interest until it’s cleared in full.

Must Your Home Be Sold to Repay the Equity Release?

Whether or not your house must be sold will depend on the equity release product and the circumstances of your estate or beneficiaries.

With a lifetime mortgage, the executor doesn’t have to sell the home to repay the equity release. They’re only interested in the repayment, not the property, so funds from other sources can be sufficient.

For example, the executor can use funds or assets from other parts of your estate to clear the debt without selling the property.

Your beneficiaries can also repay the loan with their money or use other financial methods like residential or buy-to-let mortgages to repay and keep the home.

With a home reversion plan, the home must be sold since the lender already owns part or all of it.

Your beneficiaries may try buying it back, but it will likely cost more than the original amount provided by the lender. This is something you must consider when choosing an equity release plan.

Will A Solicitor Get Involved When You Die?

The solicitor can get involved depending on who died and whether the equity release was held in single or joint names.

Solicitors rarely get involved if one person dies in a joint equity release plan. From a legal perspective, the plan will not have changed since the surviving partner will continue living in the house, and the equity release will continue until they die or move into long-term care.

Solicitors become involved more regularly upon the death of a sole borrower or when the surviving partner of a joint plan dies.

In such cases, the beneficiary should contact a solicitor specialising in equity release for guidance and help in various necessary steps after you dies.

These include sending the equity release provider the death certificate, notifying the home insurance provider, and applying for the grant of probate for permission to sell the property. The application can take 3 to 4 months and shouldn’t exceed 6 months.

Should Your Beneficiaries Consult a Financial Adviser When You Die?

Yes. A financial adviser can offer invaluable help to your beneficiaries after your death, especially in joint plans.

It will be an emotional and difficult time for the surviving partner, and the adviser will ensure they ask the equity release provider the right questions.

Consulting an adviser will help beneficiaries and the surviving partner reassess the equity release to determine if it’s being managed appropriately and how they can secure their future after your death.

Key benefits of getting financial advice at this stage include:

• Helping move the beneficiary or surviving partner to an equity release plan with lower rates, better features, and more flexibility to secure their needs now and in the future. Interest rates can fall anytime, and new plans on the market can offer better flexibility and choice. Moving them to a new plan can make more financial sense if you entered the equity release agreement many years ago.

• Performing benefit checks to determine if they can get further help. This can be possible if the household income has fallen after your death, and they can claim benefits like additional pension credit or reductions in Council Tax.

• Help with downsizing and moving. The beneficiary or surviving partner may want to downsize and move to a smaller property for various reasons. The adviser can help them assess the implications, like whether early repayment charges will apply or if the new property is enough security for the lender.

• Help to proceed with a drawdown facility. If you had a drawdown facility and didn’t withdraw all the released funds in one lump sum, some money may still be available through the original plan. The adviser can help determine whether to use the extra funds to secure the surviving partner’s future or cover other needs like funeral costs.

How Much Will Be Repaid After You Die?

The amount that must be repaid after you die will depend on:

• The loan amount you got from the lender
• The interest rate you agreed to
• The number of years that have passed after entering the equity release plan

Equity release products that meet Equity Release Council (ERC) standards must have a no negative equity guarantee.

It protects your surviving partner or beneficiaries by ensuring they don’t owe more than the home’s value, no matter what happens in the property market.

For example, if the money raised is insufficient to clear the loan when the executor sells the property, your surviving partner or beneficiary will not be responsible for paying any excess debt.

The lender will absorb the shortfall, and most have insurance plans set up to help cover such eventualities.

How Can You Protect Some Equity for Inheritance When You Die?

Equity release can affect how much of your home’s value is left to leave to your beneficiaries. In some cases, it can consume the entire property value, meaning there’ll be nothing left for beneficiaries to inherit.

Fortunately, you can protect some of the value of your home when entering an equity release agreement to ensure a portion of it is left to your beneficiary.

You can achieve this through a protected equity guarantee, also called an inheritance protection guarantee.

It allows you to ‘ringfence’ or protect a percentage of the property’s equity from being used to repay the equity release debt. Remember, the larger the percentage you protect, the less equity you can release from your home.

Final Thoughts

Understanding how equity release works when you die is crucial to ensure you and your beneficiaries are well-prepared.

Consulting an impartial and qualified equity release adviser who is a member of the ERC can ensure you get the right information tailored to your situation so you can make an informed decision.

Sources and References

• https://www.equityreleasecouncil.com/news/council-publishes-q3-2024-lending-figures/?mc_cid=a389a51416

Are you a homeowner struggling with living costs and cash flow in your later years? Equity release can be a solution if you have more value tied up in your home than in other assets or easily accessible cash.

It can help you access a lump sum out of the value of your home without having to sell or move.

Statistics from the Equity Release Council show customers accessed over £2 billion through equity release products in 2023.

The funds can come in handy if you need additional retirement income or want to cover a one-off expense, lifestyle purchase, consolidate debts, meet homecare costs, or gift a ‘living inheritance’ to family or friends.

But is equity release worth it? It’s an expensive way to raise cash and has long-term implications, so you must think carefully before diving in.

Read on to discover the ins and outs of equity release to help you determine whether it’s a good idea for you.

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How Does Equity Release Work?

With equity release, you can release some of your home’s value and turn it into cash. It’s simply a financial agreement or loan secured against your home.

You can unlock your property’s value through products that let you release or access the equity in the house if you’re 55 years or older.

You can release equity even if you haven’t fully repaid your mortgage. The lender allows you to access the funds you release in one lump sum, in small, ongoing amounts through a drawdown, or as a combination. Products you can use to release cash include:

Lifetime Mortgages – for people 55 and over

With a lifetime mortgage, you can borrow some of your home’s value at a fixed or capped rate.

You can get 20% to 60% of the property’s value and continue living in your home without making any payments. The amount you borrow, plus interest, is repaid from the sale of your house when you die or go into long-term care.

Home Reversion Plans – for people 60 and over

With a home reversion plan, you can sell all or part of your property and continue living on the property until you die or move into long-term care.

It can get you a lump sum or a monthly income, but remember, you won’t get the full market value of whatever you sell.

Once the property is sold, the proceeds are divided based on your and the lender’s portions.

What are the Risks of Equity Release with a Lifetime Mortgage?

The risk of a lifetime mortgage is that you can owe much more than you borrowed if you choose not to repay the capital or interest monthly.

Lifetime mortgages charge compound interest, so the amount you owe will increase every month. The interest is usually higher than the top rates of standard residential mortgages.

If you don’t make repayments to reduce the debt, the interest will compound and drastically increase the loan size, especially if you live for a long time.

For example, if you release £20,000 worth of equity at 60 with an interest of 6%, the amount you owe can double every 12 years.

Therefore, if you live until 72, you’ll owe roughly £40,000. If you live until 84, you’ll owe £80,000.

Making monthly repayments as you go can reduce this risk by lowering the debt you owe to ensure the interest doesn’t compound rapidly.

You can also avoid borrowing the total amount in one go so the interest doesn’t have a long time to compound. It can help you avoid paying interest on the whole amount for the entire period.

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What are the Risks of Equity Release with a Reversion Plan?

The main risk of releasing equity with a reversion plan is that you’ll only get a fraction of the value of the portion you’re selling.

Providers buy all or part of the property at below-market value, usually between 20% and 60% of the actual value, mainly because they’ll have to wait many years to get their money back.

For example, if your house is worth £300,000 and you sell 50% to a reversion plan provider, they may offer you £75,000 instead of the £150,000 that the share is worth.

If the house later sells for £400,000, the provider will be entitled to 50% of the sale proceeds, which is £200,000, yet they only advanced £75,000!

You may also face penalties or other issues if you move to a care home, and the reversion agreement doesn’t allow it.

Providers may also require you to be vacated quickly after death, resulting in further stress for the family. Such risks make reversion plans less popular than lifetime mortgages.

How Much Does Equity Release Cost?

In addition to the interest, there are several fees to consider when entering an equity release agreement. These include:

Advice fees – Your financial adviser can charge a fee for their advice. Others may not charge for the advice but will get a commission from the provider when you take out an equity release plan.

Valuation fees – The lender may need you to pay the valuation fees for surveying the property. The amount can vary depending on your home’s value, and it’s usually paid when you apply.

Application fees – These are payable when the equity release transaction goes through. You can pay for it by borrowing a bit extra on the plan.

Legal fees – You’ll pay for the services of a solicitor who will deal with the legal aspects of the scheme.

The total fee amount can reach between £2,000 and £3,000, depending on your plan type.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Is Equity Release Safe?

The FCA and ERC heavily regulate equity-release products to protect you.

Providers offering lifetime mortgages or home reversion plans must follow the FCA’s rules about equity release.

They must take reasonable steps to ensure any equity-release products they recommend suit you. When determining if it suits you, the provider must also consider how the equity release will affect your benefits and tax position.

The Equity Release Council (ERC) represents various parties involved in equity release, including lenders, qualified financial advisers, and solicitors.

It aims to provide information and protection when considering an equity release scheme. Entering equity release with a provider who is an ERC member provides further safeguards. These include:

• The right to stay in your home for the rest of your life or until you move into long-term care
• Fixed or capped interest rates for lifetime mortgages
• Portability or the ability to move houses later provided the equity release provider agrees that the new property is suitable as security
• The ability to make repayments without penalty
• A ‘no negative equity’ guarantee where you or your estate will not have to pay anything else if the money raised is insufficient to clear the loan when the provider sells the property

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Tips for Equity Release and Pitfalls to Avoid

Always Seek Advice

Entering an equity release agreement is a big decision, so get advice from an independent, qualified adviser. It’s a requirement of the FCA that ensures you get a clear and accurate explanation of the equity release plan, its advantages and limitations, and the terms and conditions.

Avoid Taking Out All the Money at Once

If you take out all the money you release in one go, the interest will have a longer compounding time, increasing the size of your debt.

Borrowing in stages can be more cost-effective since it allows you to pay less interest over time, so consider taking as little as you need first and waiting as long as possible before adding to the debt.

The drawdown plan on lifetime mortgages makes this more accessible, and data from the ERC shows it’s preferred by over 50% of customers who take out new equity release plans.

Involve Your Family in the Process

The debt can significantly impact what you leave as inheritance, and your loved ones will likely need to sort the final repayment since it occurs when you die or move into long-term care.

Therefore, involving them in the process is vital to ensure they’re not caught unawares during the difficult time.

Know How Equity Release Will Affect Your Benefits

Turning the equity in your property into cash can affect the means-tested benefits you’re entitled to, such as pension or universal credit. You may still be treated as having the money to work out how much benefit you’re entitled to, even if you’ve already used the funds.

It can be complicated, so consult an independent adviser to determine how equity release will affect your benefits.

Ensure the Lender is an ERC Member

Taking out an equity release product with a lender who is an ERC member ensures you’re protected. ERC members must offer products that meet set standards and provide all the information they need to make an informed decision.

This includes information about costs, what will happen if you move properties, and how changing house prices can affect you.

Consider Alternatives

Equity release isn’t your only option for raising cash. Due to the costs and risks involved, it should be your last option. You should first consider alternatives like:

• Downsizing – You can sell the property and move to a smaller home suitable for your changing needs. You can then live off the excess cash or use it for care needs.
• Unsecured Borrowing – You can take out an unsecured loan provided you can afford repayments with your usual income. It’s less risky and cheaper than equity release.
• Savings and assets – Using your savings is a fast, cost-free option to help you pursue your desired goals. You can also sell other assets or investments that are less valuable than your home, such as your car or expensive jewellery.

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Is Equity Release A Good Idea?

Equity release may be a feasible option if you need the money and don’t have any alternatives.

For instance, you may not want to downsize and move because it will impact your social life, or your income and savings aren’t enough to cover your immediate needs and retirement.

It can be a suitable solution if you’re okay with reducing the size of your estate or inheritance because:

• Your kids want to receive the money now
• You don’t have any children or beneficiaries
• Your children don’t need any inheritance and would prefer if you spent the money

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Final Thoughts

Equity release can be helpful in your later years, especially if you’re struggling with cash flow or living and care costs. However, it has various risks and can be expensive.

Consider the benefits and limitations and how they will impact your estate, financial situation, and beneficiaries.

Ensure you seek advice from an independent and qualified equity release adviser to get the information you need to make an informed decision before purchasing a product.

Sources and References:

• https://www.equityreleasecouncil.com/wp-content/uploads/2024/01/240131-Equity-Release-Council-Q4-FY-2023-market-statistics-news-release-FINAL.pdf

To know the amount of equity you can take out of your home, you must first consider the value of your property and how old you are.

It’s usually called equity release and is an excellent way to access the money tied up in the value of your home without selling the property.

With an equity release, you can access a few bucks for regular bills or something more substantial for retirement and care costs. But you must be careful because it comes with some risks.

Read on to learn more about releasing equity from your home and why you must seek advice before proceeding.

What Is Equity Release?

An equity release is a product that gives you access to the equity you’ve built up over the years by repaying your mortgage.

Your equity is the portion of the property you own outright. If you have a mortgaged property, the equity is the difference between the property’s value and the balance you have left to pay for the mortgage.

For example, if you have £100,000 left to repay on your mortgage, and the home’s current value is £250,000, your equity is £150,000 (£250,000 – £100,000).

The money is tied to your home, but with an equity release, you can borrow some of it without selling the property. It gives you access to liquid funds, but your equity is reduced.

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What are Your Options When Releasing Equity?

There are two main types of schemes you can use to release equity. These include:

Lifetime Mortgages

Most providers require you to be 55 years or older to qualify for a lifetime mortgage. It’s the most common type of equity release, allowing you to borrow up to 60% of your property’s value.

A lifetime mortgage provider can offer the funds in a single lump sum or smaller amounts over time.

With lifetime mortgages, you retain home ownership and can make monthly interest payments or pay nothing. The amount you borrow plus any interest gets repaid when the property is sold after you permanently move into long-term care or die.

Home Reversion Plans

A home reversion plan involves selling all or part of your home to an equity release provider. You can get a lump sum or smaller monthly payment and still live on the property until you die or move to permanent care without paying rent.

Providers usually set higher age limits for home reversion plans, and you may need to be at least 60 to qualify.

The percentage of the equity you can release using a home reversion plan can be as much as 80%. However, the amount you get will be less than the home’s market value.

Providers usually take a significant percentage of the property to protect their investment since they may have to wait long to make any returns.

Home reversion plans are considered riskier, and most advisors recommend using a lifetime mortgage to release equity.

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What Factors Affect How Much Equity You Can Take Out?

The amount of equity you can take out of your home will depend on:

Your Age and Health

Your age and health help providers determine how long you’ll live. Your life expectancy is vital because the lender will not make any return on equity release until the end of the plan when you pass away or move into a permanent long-term care facility.

The longer you remain living on the property, the longer it will take for the lender to receive the repayment.

Therefore, providers offer higher amounts for older homeowners with a shorter life expectancy. They can also provide more significant amounts if you have a health condition or lifestyle habit that is likely to reduce your lifespan, such as smoking.

Property Value and Condition

The lender will need a professional valuation to determine how much your home is worth. They’ll consider any potential increases or decreases in value to determine how much equity you can release.

The amount you can release will also be lower if your property is in poor condition. Lenders want to ensure your property is easy to sell, so it may be deemed unsuitable if it requires some work before selling.

Some providers may even require you to use some of the funds for repairs as part of the agreement.

Property Type

Your property type can also impact how much equity you can take out. The provider may offer a lower amount or refuse to lend if you have a non-standard property like a listed building or a house with a thatched roof.

Non-standard properties feature less demand and unpredictable prices, making them unattractive to equity release providers. They can also require additional maintenance or specific insurance that can be costly, making them less appealing to potential buyers.

What Are the Pros and Cons of Releasing Equity?

Considering the advantages and limitations of equity release can help you determine whether it’s the right option for you.

Pros

• Tax-free cash – You can get tax-free cash as a lump sum or regular payment.
• Stay in your home – You can stay in your property for as long as necessary. It allows you to enjoy your retirement in a familiar setting and provides the money you need to adapt your home to your changing needs.
• Peace of mind – Since you don’t have to make any payments, you can live in your home without financial pressure or penalties until you move or die.
• Broader eligibility – Providers aren’t usually concerned with your credit history or income like standard mortgages.

Cons

• Impact on benefits – The money you get by releasing equity can affect the benefits you’re entitled to.
• Reduced inheritance – The loan and accumulating interest will gradually reduce your equity. Your loved ones can only get what’s left after the loan is repaid or the portion you didn’t sell.
• Lifestyle restrictions – The lender may set restrictions like not leaving the house empty for long periods, using the home as a holiday let, or making structural changes.
• Application costs – You may pay substantial fees for solicitors, valuation, and transaction arrangements.
• It can affect future care plans – Releasing equity too early can affect your options when you need money to fund long-term care for you or your partner in the future.
• Bills and maintenance – You’ll still be responsible for paying all the usual bills like council tax and arranging maintenance and repairs. You may need to set aside money for this regularly.

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Can I Release More If I Already Have Equity Release?

Yes. You may be able to release more equity from your home, but you may have to wait. You can find out if you’re eligible from your provider and any costs involved. They can also provide all the details you need to make an informed decision.

You can also consider asking for a combination of a lump sum and drawdown facility in a lifetime mortgage.

It involves only taking a portion of the loan amount as a lump sum and getting smaller amounts as a regular income or when you need money, up to the agreed maximum.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Why Should You Seek Advice when Considering Equity Release?

Releasing equity is a lifetime commitment that will impact your future and your loved ones. Equity release products can be complex, and you get a clear and accurate explanation of the terms and conditions and pros and limitations before entering a scheme.

You must speak to an equity release specialist before deciding to ensure you understand the risks. They’ll give you essential information and help you understand your choices and alternative options to consider so you can make the right decision for your situation.

Ensure you consult an adviser or broker authorised by the Financial Conduct Authority (FCA). They should also be an Equity Release Council (ERC) member.

ERC members must adhere to specific standards, and you must ensure that the product you’re considering meets all of them. These include:

• Assurance that you can stay in your home for life or until you move into care.
• Interest rates are fixed or, if variable, they’re capped to a maximum rate for the scheme’s duration.
• Ensuring you have received independent legal advice from a solicitor who is an ERC member.

What Are the Alternatives to Releasing Equity?

Alternatives you can discuss with your advisor include:

• Downsizing – You can sell your home and move to a cheaper or smaller property. It allows you to get the funds you need from the profit but can significantly impact your social life.
• Unsecured Borrowing – If you only need a small amount and can afford repayments with your usual income, consider an unsecured loan. It can be cheaper and less risky than equity release.
• Savings and assets – Using your savings is a fast, cost-free option to help you pursue your desired goals. You can also sell other assets or investments that are less valuable than your home.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Final Thoughts

The equity you can take out of your home will depend on your age, health, and the property’s value, condition, and type. Ensure you get impartial advice from an independent adviser and think carefully before entering an equity release.

Are you considering paying off the balance on your mortgage, remortgaging with a different lender, or transferring the loan to a different property and wondering how much it will cost?

Knowing how much it can cost to end a mortgage before the agreed term ends is vital for making informed decisions.

Here is everything you need to know about early mortgage exit fees.

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What is An Early Exit Mortgage Fee?

An early exit fee is an administration charge that lenders impose when you pay off your mortgage before the agreed term ends.

You’ll likely face an early exit fee when you remortgage to a new lender, move houses, and port your mortgage or make overpayments to clear your balance early.

Lenders may refer to an early exit fee in various names, including closure fees, repayment administration fees, discharge fees, or deeds release fees.

The payment usually covers the administration costs of closing your mortgage account, including releasing deeds and updating records.

Previously, mortgage lenders typically held the property title deeds and placed a legal charge against your house until you repay the debt.

The exit fee covered the costs of removing the charge and sending the deeds to your solicitor or new lender, hence the ‘deeds release fee.’

How Much is An Early Exit Fee?

Early exit fees differ among lenders, ranging from £50 to £300. Some lenders don’t charge exit fees for new applicants, while others include it as part of the administration fee.

They can refer to it as an account fee and charge you upfront at the beginning of the mortgage instead of waiting until your exit.

Ensure you review your terms when comparing options and consider the impact of the exit fees when deciding whether to remortgage and switch providers before the end of your deal.

If your current lender charges exit fees, you must determine whether the benefits of moving to a new lender, such as low monthly payments, outweigh how much you’ll pay when leaving.

Some older mortgage deals may feature higher fees, so check your mortgage agreement if you’re unsure about what you might pay.

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When Will You Pay a Mortgage Exit Fee?

Generally, you’ll pay an early exit fee anytime you close the mortgage account with your current lender. This can happen in scenarios like:

• The End of Your Term – When you make your final payment at the end of your agreed mortgage term, the lender will formally charge the exit fee to close the account.

• When Remortgaging – If you decide to switch to a new lender before your current mortgage term ends, you must pay the exit fee to close the old account before opening a new one.

• When Selling Your Property – If you sell your house and use the proceeds to repay your mortgage, the lender can apply the exit fee as part of the settlement process.

Is the Mortgage Exit Fee Similar to an Early Repayment Charge?

No. Mortgage exit fees differ from early repayment charges (ERCs). You’ll normally pay an ERC when leaving a particular interest rate deal before the agreed term ends.

This can be a fixed-rate, tracker, or discounted mortgage deal, and the charge usually applies during the tie-in period because of breaking the agreement.

An early repayment charge can cost you more than an exit fee, depending on the lender’s terms and when you pay off the mortgage. Lenders usually charge ERCs as a percentage of the outstanding mortgage amount, ranging from 1% to 5%.

For example, assume you have a £200,000 mortgage on a 5-year fixed deal with an ERC of 2%.

If you want to remortgage and move to a different lender after 2 years, your current lender will charge you £4,000 (2% x 200,000) for switching before the agreed term ends. If the lender has an exit fee, they’ll include it in the total amount.

Some lenders charge ERCs on a sliding scale, where the percentage decreases over time. For example, the lender may charge 5% in the first year, 4% in the second, 3% in the third, and so on until the tie-in period ends.

Others don’t charge ERCs in every scenario, so ensure you review the specifics of your agreement when considering a switch or ask the lender directly.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

How Can You Avoid Mortgage Exit Fees?

The mortgage exit fee is generally unavoidable unless your lender doesn’t impose it.

Even if you choose to ride out the mortgage term to the very end, they can still charge the fee as an admin expense to close your mortgage account.

However, there are various strategies you can use to reduce their impact. These include:

• Confirming the fee before entering an agreement – Ask potential lenders about their exit fee when shopping for a mortgage. This can give you a clearer picture of how much it will cost to close the account in the future.

• Avoid frequent switching – Remortgaging too often will result in repeated exit fees, which can pile up and outweigh the benefits of changing lenders. Ensure you compare the benefits of new deals with the cost of the fees associated with leaving the current lender.

• Negotiate with your lender – Although it’s not guaranteed, you can try negotiating with the provider, especially if you’ve been a long-term customer and your repayment history is excellent. Sometimes, the lender may be willing to reduce the exit fee or waive it altogether.

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Can You Get Overcharged?

In the past, there were cases of customers facing higher exit fees than expected, but a Statement of Good Practice from the Financial Services Authority (FSA) helped prevent such increases. Following the statement, lenders agreed to charge an exit fee that can’t vary during your mortgage term.

The fee should also reflect the admin costs of an exit, and any variations should be explained from the outset. If a lender charges you a higher exit fee than what is stated on your contract, you’re allowed to ask for a refund.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Final Thoughts

Understanding all the fees associated with a mortgage, including exit fees, is essential to make informed decisions in your house-buying journey.

Always ask potential lenders about all the fees involved and incorporate the services of a mortgage broker who can guide you through the process and ensure nothing sneaks up on you.

Sources and References

• https://www.fca.org.uk/news/press-releases/mortgage-exit-administration-fees-meafs-update

Proving that you have a stable job and income is vital for getting approved for a mortgage.

Lenders verify income by asking for payslips if you work as a pay-as-you-earn (PAYE) employee. Payslips prove how much you earn and help assess how much you can borrow.

But how many payslips do you need for a mortgage in the UK? Read on to find out.

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How Many Payslips Are Required for a Mortgage?

Mortgage providers usually require you to provide at least three of your most recent payslips if paid monthly. The number of payslips you must provide will vary based on various factors. These include:

Frequency of Payments

Lenders can ask for a different number of payslips depending on how often you get paid.

The payment frequency will help determine the consistency of your income, with most lenders preferring to work with borrowers with regular income instead of unpredictable earnings.

The table below shows the number of payslips you may need for a mortgage depending on the frequency of payments:

Payment Frequency	Number of Payslips Needed
Every week	8 payslips
Every two weeks	6 payslips
Every month	3 payslips
Every quarter	3 payslips
Every half-year	4 payslips
Every year	2 payslips

Extra Income

If you get extra income like a bonus, overtime, or commission, lenders will need you to show more payslips.

Providers may consider the additional income as part of their earnings depending on their criteria and the type of income.

You must show the lender that the extra income is regular so they can count it as part of your earnings.

The Lender’s Policy

Lenders can have varying requirements and criteria for mortgage approval. Some can feature strict guidelines for proving income, while others can be more flexible.

Factors like your credit score or deposit size can also impact how many payslips you must show. You may face less scrutiny if you have a sizeable deposit or a strong credit history.

What Information Should Your Payslips Include?

Most lenders require your payslips to have essential information like:

• A clearly shown pay date and tax period
• Employee name that matches the name in the mortgage application
• Your net pay
• Your gross pay in the form of basic salary, notional salary, or contractual pay
• Additional allowances, including shift, location, or car allowances
• Any overtime, bonus, or commission if included
• An address matching the address on your application
• The employers name
• The outgoings included in your application, such as childcare or student loan payments

Why Do Lenders Ask for Payslips?

To Confirm Your Employment and Profession

The payslips prove to the lender that you’re permanently employed and have a stable income to afford mortgage repayments comfortably.

Your employment type can affect how much you can borrow. High street lenders like banks prefer working with employed applicants as they’re considered lower risk.

They also favour applicants in low-risk careers, including those with a structured career path, such as doctors, police, teachers, and solicitors. Borrowers in such careers can easily qualify for higher income multiples.

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To Comply with Lending Regulations

The Financial Conduct Authority (FCA) requires mortgage providers to assess whether you can afford repayments for the loan you wish to take out before approval.

Lenders must take reasonable steps to ensure you don’t get into unmanageable debt, including asking for your payslips to confirm your earnings.

They undertake a mortgage affordability assessment by considering your income, debts, and how much you spend.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

To Determine Your Borrowing Capacity

Payslips also help lenders confirm how much you earn to determine how much you can borrow.

Most lenders assess your borrowing capacity using income multiples and are willing to offer 4 to 4.5 or 5 times your annual income.

For example, if your income is £40,000, you’ll likely be able to borrow £160,000-200,000.

If your payslips show consistent overtime, bonus, and commission payments, some lenders can include them as part of your overall income, increasing your borrowing capacity.

To Calculate Your Debt-to-Income Ratio

The payslips also allow lenders to calculate your debt-to-income ratio when assessing your affordability.

The ratio shows the proportion of your income spent on paying off existing debts, including personal loans, credit card debt, or car finance.

For example, if you have a monthly income of £2,000 and spend £500 paying off debts, your debt-to-income ratio is ((500/2,000) x 100), or 25%.

The lender will reduce the amount they’re willing to offer if you have a large debt, such as 50% of your monthly income.

Most lenders prefer a debt-to-income ratio below 20% since it shows you’re a low-risk borrower who manages debts well.

Can You Qualify for a Mortgage without Payslips?

Yes! If you’re self-employed or a contractor, you can use other documents instead of payslips to prove your income. Lenders will want evidence of your recent, current, and potential future earnings.

Documents you can use include:

Tax Returns

Most lenders will require you to provide at least two to three years of your SA302 tax overview or HM Revenue and Customs (HMRC) documents.

They’ll calculate your earnings over two or three years of accounts, with some considering one year of accounts or less.

If you do your Self-assessment tax return, you can print your tax year overview or tax calculation using commercial software or the HMRC’s online services.

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Bank Statements

Lenders will want to see your bank statements for 3 to 6 months to assess your finances and income.

Bank statements can help lenders verify your income, clarify affordability, check for additional risk factors, and see your deposit funds.

Things that lenders look at in your bank statements include how much you earn, the outgoings, deposit source, and issues like excessive gambling or possible fraud.

You can optimise your bank statements before applying by avoiding unnecessary overdraft facilities, avoiding non-essential purchases, and ensuring your income or earnings go into the same account.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Final Thoughts

Most lenders require at least three of your most recent payslips to qualify for a mortgage if you’re paid monthly.

However, the payslips needed can vary depending on how often you’re paid, the lender’s policy, and whether you receive any extra income.

Taking out a mortgage is a big financial commitment, so it’s essential to work out how much it will cost you.

Knowing your monthly repayments will help you determine whether the deal you get is affordable now and in the future.

This guide explores everything you need to know about repayments on an £80,000 mortgage over 10 years.

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What is the Monthly Cost of an £80,000 Mortgage Over 10 Years?

The monthly cost of an £80,000 mortgage over 10 years would be £849. This is based on a capital repayment agreement and an interest rate of 5%, a typical deal in the current UK market.

The total amount you’d pay by the end of the mortgage term would be £101,823. You can get lower monthly repayments if you take out the mortgage for a longer term, but you’d pay more overall.

What Factors Impact Repayments an £80,000 Mortgage Over 10 Years?

Various factors can impact the monthly repayments on an £80,000 mortgage over 10 years. These include:

Repayment Type

You can choose a capital or interest-only repayment mortgage, and each will impact how much you pay monthly.

Most residential mortgages in the UK involve a capital repayment structure where you pay back a portion of the capital and interest every month.

With interest-only mortgages, your monthly repayments only cover the interest, so you’ll still owe the full amount you borrow at the end of the term.

You’ll get lower monthly repayments with an interest-only mortgage, but you’ll pay more overall and must have a reliable repayment vehicle to repay the capital in one lump sum.

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Interest Rate

Lenders charge an interest on the amount you borrow when you take out a mortgage. It’s the cost of borrowing the money and is a percentage of the loan amount. The interest is usually added to your monthly mortgage repayments, impacting how much you pay.

A low interest rate will translate to lower monthly repayments and reduce the total cost of the mortgage, so you can save a lot by getting a favourable rate.

Factors that will impact the interest rate you get include your credit history, employment status, and loan-to-value (LTV) ratio.

For example, although there are lenders who will help you get a mortgage if you have non-traditional employment, they’ll likely charge a higher interest rate than someone with a formal job.

The table below shows how much a £80,000 mortgage over 10 years will cost per month and, in total, based on different interest rates on a capital repayment structure.

Interest Rate	Monthly Repayments	Overall Repayment
3.5%	£791	£94,930
4%	£810	£97,195
4.5%	£829	£99,493
5%	£849	£101,823
5.5%	£868	£104,185
6%	£888	£106,580

Product Type

The mortgage type you choose will impact your repayments. The most common product types for residential mortgages in the UK are fixed-rate and tracker-rate mortgages.

A fixed-rate product allows you to lock in the same interest rate for a period. The interest rate remains the same no matter what happens, so your repayments won’t be affected when interest rates in the market rise.

You can plan for the same amount monthly and get significant savings if you lock in a low rate for the long term.

Tracker rate mortgages change according to the base rate set by the Bank of England. The tracker rate rises when the base rate rises and falls when it goes down, meaning your repayments can differ from one month to the next.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

Credit History

Your credit history helps lenders determine how well you manage your finances and your reliability as a borrower.

It can show how responsible you’ve been when borrowing money. A positive credit history will improve your chances of getting a mortgage with better rates, which will reduce your monthly repayments and overall cost.

You’ll likely get a higher interest rate if you have a negative credit history since lenders consider you a higher risk.

Deposit Size

The deposit size will affect the interest rate you get and impact your monthly repayments.

Lenders have minimum deposit requirements, which is the amount you must put down to qualify for the mortgage.

The lowest you can get is 5% of the property’s value, but such deals will feature less favourable interest rates.

Many lenders will want you to put down a 10% deposit. Higher deposits can give you access to a wider pool of lenders with better deals and more competitive interest rates that will keep your repayments low.

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What Other Costs Are Involved?

You should expect other costs before and after taking out an £80,000 mortgage. These include:

Product/Arrangement Fees

Some providers can charge up to £2,000 to set up the mortgage. Others may not charge anything but will likely have higher interest rates.

You can pay it upfront or add it to the mortgage, increasing your debt and monthly repayments.

Valuation Fees

Depending on the lender, you may need to cover the property valuation cost. Valuation ensures the property is worth what you’re paying and can cost you between £250 and £1,500. In certain deals, the lender can waive this cost.

Booking Fee

You may need to pay a fee when making a formal mortgage application. It can cost from £99 to £250, and you’ll need to pay upfront. Some lenders can waive this fee or roll it into the product fees.

Account Fees

The account fee covers the general administration of your mortgage account, including maintenance and eventual closure. It can cost from £100 to £300.

Missed Payment Penalties

If you fall into arrears or miss a mortgage payment, the lender may charge a missed payment penalty, which can vary depending on the lender.

Early Repayment Charges

Some lenders can impose an early repayment charge (ERC) if you overpay more than the allowed limit or pay off your mortgage too early. It’s usually 1% to 5% of the outstanding mortgage.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Final Thoughts

Repayments on an £80,000 mortgage over 10 years can vary depending on the repayment type, interest rate, deposit size, product type, and credit history.

Consulting a qualified and experienced mortgage broker can ensure you get the best deal for your situation.

Knowing how long it would take to sell your house can ensure you set realistic goals and expectations.

The process can feel lengthy and frustrating, especially if you’re in a rush. Every property is different, and various factors can impact the selling process, some of which are outside your control.

This guide explores everything you need to know about how long it takes to sell a house in the UK to ensure you have a realistic timeline of the process.

What is the Average Time of Selling a House in the UK?

The UK government notes that the average time to sell a home in the UK is around five months.

However, it can take longer depending on where you live, the type of property you’re selling, and whether you’re involved in a chain or sequence of property transactions.

It’s important to note that the timeline runs from the moment you list your home until the completion date when the buyer can move in.

How Long Do the Stages of Selling a House Take?

Selling a house involves several stages, each impacting the total time taken. These include:

Stage 1: Listing Your House (1-3 Days)

Listing your house on the open market, also known as an estate agent sale, is the first stage in the selling process. It involves advertising your home with an estate agent to find and negotiate a deal with interested buyers.

Research estate agents before you get the ball rolling to avoid wasting time looking for the right match.

Once you choose a suitable agent, they’ll visit your property to take photos for the listing and ensure the home has a valid Energy Performance Certificate (EPC). The process can take between one and three days.

Stage 2: Getting An Offer (5-14 weeks)

An essential factor that will impact how long it takes between listing your property and getting an offer is how hot or cold the property market in your area is.

In cold markets, there are a few buyers around, meaning your home can take a while to sell, while in hot markets, there’s more demand from buyers, meaning your house will sell quickly.

You can get an offer in around five weeks or 32 days in a hot market, and it can take around 14 weeks to get an offer in a cold market.

Stage 3: Conveyancing and Mortgage Application (12-16 weeks)

Conveyancing is usually the longest part of the house-selling process and can take around 12 to 16 weeks. It starts after accepting an offer on your property and involves checks to ensure you and the buyer are truthful about the property and the ability to buy.

The buyer’s solicitor organises various searches on your property, including local authority searches, environmental searches, water and drainage searches, and a Land Registry search.

The conveyancing can take longer if the searches find a problem that requires further investigation or if the property has a leasehold or restrictive covenants.

Due to limited resources, local authorities can be slow when completing search requests.

The buyer’s mortgage can directly depend on the results of the surveys, which can delay the process further since selling the property depends on the buyer’s access to funds.

The buyer’s conveyancer will also contact the other conveyancers in the chain to prepare contracts for exchange and completion.

Stage 4: Exchanging Contracts and Completion (7-28 days)

You can exchange contracts once the surveys and searches are complete and the buyer has arranged their finances.

Both parties and their conveyancers will review the contracts to ensure they’re correct. The conveyancers from both parties will then make a formal exchange.

The exchange can occur over a recorded phone call and usually happens as part of a property chain.

All the buyers in the chain must be fully ready since it involves the first conveyancer calling the second to conduct the exchange, the second calling the third, and so on. The process continues until all the parties in the chain finish exchanging contracts.

The property purchase becomes legally binding to complete after the contract exchange. You can sue the buyer for your legal costs and deposit if they back out after the exchange.

Related reading: 

• Reasons for remortgaging.
• Remortgaging to release equity.
• Remortgaging to buy another property.
• Remortgaging with bad credit.
• Remortgaging for home improvements.
• I own my house outright can I remortgage? 
• Capital raising mortgages.

The final stage is completion and involves the buyer becoming the legal owner of the house.

All parties in the chain agree on a completion date before exchanging contracts. It’s the day sellers move, and buyers pay in full for the property through their conveyancer or solicitor.

Although it’s possible to exchange and complete on the same day, it’s not recommended. It can be challenging to arrange and can result in disaster if a mortgage company fails to pay out in time or some paperwork goes missing.

Completion is generally set for 7 to 28 days after the contract exchange to give everyone enough time to get their money in place and prepare for the upcoming move.

What Can You Do to Speed Up the Sale of a House?

Make Your Property More Desirable

Your property’s condition is one of the most influential factors when selling a house in the UK.

Homes in good condition usually sell faster than those requiring work, so make your property as desirable as possible to attract buyers and offers.

You want buyers to visualise themselves living in the house, which can be challenging if poorly maintained and cluttered.

Set a Reasonable Price

Reasonable pricing will attract more buyers and lead to more offers. Fewer people will view and make offers on overpriced houses, meaning they’ll stay on the market longer, and you may end up selling for a lower price than you would have if you had listed it for less.

Research the recent sales prices of similar houses in your area to determine a realistic price. You can also consider size, location, condition, and unique features.

Communicate and Stay Responsive

Keep regular contact with your estate agent and solicitor to ensure you’re up to speed with progress and that it’s on track.

You can also arrange regular updates with everyone involved to ensure they know what they should do and when. You should also go through, sign, and return all documents quickly to avoid delaying the process.

Final Thoughts

Selling a house in the UK can take around six months or up to 34 weeks. However, the time can vary depending on how long each stage takes.

Strategies like making your house more desirable, setting a reasonable price, regularly communicating with all parties, and staying responsive can help speed up the selling process.

Sources and References

• https://www.gov.uk/selling-a-home

An interest-only mortgage can be right for you if you want to buy a property and keep monthly payments low since you’re only paying the interest. According to statistics, 49% of UK households are still experiencing the cost-of-living crisis as of September 2024, making the lower monthly payments of interest-only mortgages more attractive.

However, they can be more expensive overall and carry more risk than a repayment mortgage, so it’s vital to ensure you make an informed decision. This guide explores interest-only mortgage rates in the UK and everything you need to know when looking at interest-only mortgage deals.

What Are Interest-Only Mortgages?

Interest-only mortgages are a type of mortgage product where the monthly payments only cover the interest you owe and not the capital you borrow. You only repay the capital as a lump sum at the end of the mortgage term. For example, if you take out an interest-only mortgage for £150,000, you’ll still owe the lender £150,000 at the end of your mortgage term.

Although the monthly repayments work out cheaper, the long-term costs are higher since the interest is charged on the total amount each month for the entire term.

What Are the Best Interest-Only Mortgage Rates in the UK?

Interest-only mortgage rates in the UK can be fixed or variable, and they usually differ between lenders so it’s always recommended to shop around to find the best deals. Generally, interest-only mortgages feature higher interest rates than standard repayment mortgages since there’s more risk to the lender.

The table below can give you a rough idea of the interest-only mortgage rates available among different lenders.

Lender	Initial Rate	Max LTV	Product Details
Nationwide	4.04%	60%	5-year fixed rate
Santander	4.40%	75%	2-year fixed rate
Barclays	4.65%	90%	5-year fixed rate
HSBC	5.54%	85%	2-year tracker rate

The rates are accurate as of September 2024 but can change at the lender’s discretion. Various mortgage rate calculators are available online to help you compare the rates among different lenders based on factors like property value, mortgage amount, and term.

A specialist mortgage broker can also help you access some of the best interest-only mortgage rates available by giving you access to the entire market and offering bespoke rates suitable for your circumstances.

Does Deposit Affect Interest-Only Mortgage Rates?

Yes! The amount of deposit you have can affect the interest-only mortgage rate you get. A considerable deposit will lower the loan-to-value (LTV) ratio, which is the amount of the property’s value the mortgage will cover. For example, if you have a 20% deposit and take out a mortgage to cover the rest of the property’s value, the LTV will be 80%.

Most lenders have caps on the minimum LTV they can accept on interest-only mortgages. The lower the LTV, the higher your chances of getting favourable rates from the lender. A larger deposit will also give you access to more lenders and mortgage deals since you’ll be considered a lower risk.

Can You Get a Residential Interest-Only Mortgage?

Although it’s not impossible to get a residential interest-only mortgage, it’s more challenging than getting one for a buy-to-let property. Not all lenders offer interest-only mortgages because they’re considered high risk, and those who do feature strict eligibility criteria. These include:

• Large deposits – You must have a substantial deposit to qualify, such as 25%. Some lenders insist on higher amounts and reserve the best rates for those with deposits of 40% and above.

• High incomes – Some lenders will set higher minimum income requirements for residential interest-only mortgages, while others will only consider high net-worth individuals. Minimum thresholds can range from £50,000 – £75,000 per year for single applicants or a combined income of £100,000 for joint applicants.

• Repayment plan – Lenders will require you to have a solid repayment plan for clearing the lump sum at the end of the mortgage term. These can include savings, investments in shares or bonds, a pension plan, unit trusts, selling a different property, or selling other assets like vehicles.

• Standard property – Most lenders will only consider your application if you’re buying a property with standard construction. Properties with non-standard constructions, like those with timer frames, pose higher risks for lenders.

Can You Switch to An Interest-Only Mortgage?

Yes. It’s possible to switch from a repayment mortgage to an interest-only mortgage if your lender agrees, and it can be an effective short-term solution to keeping your monthly payments manageable.

Thanks to the government’s Mortgage Charter introduced in 2023, you can get a temporary breather by switching to an interest-only mortgage without worrying about affordability assessments or credit checks. It makes it easier to switch for six months and get temporary relief by lowering your monthly outgoings. You’ll then revert to your original repayment structure after six months.

If you’re considering a long-term switch to an interest-only mortgage, you must ensure you meet the lender’s criteria and have a robust repayment plan.

Can You Get a Part Interest-Only Mortgage?

Yes. Such products are called part and part mortgages, and they combine both capital and interest-only repayments. Half-repayment and half-interest mortgages allow you to repay a portion instead of all of your mortgage through monthly repayments, leaving you with a smaller balance to settle at the end of the term.

A part interest-only mortgage offers unique benefits, including:

• Paying less in monthly repayments than a repayment mortgage
• Reducing the amount you would have paid at the end of an interest-only mortgage
• Paying less interest than an interest-only mortgage since the debt reduces over time

However, you still need to have a feasible repayment strategy to clear the lumpsum at the end of the mortgage.

Can Remortgaging Reduce Interest-Only Mortgage Rates?

It’s possible to get better rates when remortgaging on an interest-only mortgage since you’ll likely have more equity, which reduces the risk for the lender. If you’ve already paid down a large amount of your mortgage or the property has risen in value, you can get reasonable rates on an interest-only remortgage and save money on monthly payments.

You can shop around for better deals or ask your current lender about their offers since most providers usually have exclusive rates for existing customers.

Final Thoughts

Interest-only mortgages can ensure your monthly payments remain low, but they’re riskier than repayment mortgages and feature higher long-term costs. Consulting an experienced mortgage broker can help you access some of the best interest-only mortgage rates available by giving you access to the entire market.

Sources and References: 

• https://www.statista.com/statistics/1300280/great-britain-cost-of-living-increase/#:~:text=British%20adults%20reporting%20a%20cost%20of%20living%20increase%202021%2D2024&text=As%20of%20September%202024%2C%2049,45%20percent%20in%20late%20July.
• https://www.gov.uk/government/publications/mortgage-charter/mortgage-charter