Equity Release for Over 70s – Detailed Overview

Are you eager to learn about equity release for people over 70? You’ve come to the right place. Every month, over 7,000 people visit our site to learn about equity release. This article will teach you about:

• How to release money from your home.
• Getting a fair quote.
• Why people choose equity release.
• The risks of equity release.
• Rules about age for equity release.

Equity release might seem tricky. That’s okay; we understand and are here to help you learn. We’ve got lots of simple advice to help you understand how it all works. Our goal is to make things clear, so you can make the best choice for you.

Let’s dive in.

Can an elderly person get a home equity loan?

Elderly people can find it difficult to get a home equity loan or HELOC, especially for larger amounts where a longer repayment period is required. Lenders usually offer home equity loans to younger homeowners who are still working with a regular income. 

But just because elderly people cannot get home equity loans easily does not mean they are not able to borrow against their home equity. Many senior homeowners decide to use an equity release product instead. 

What are equity release schemes? Find out below. 

Is there an age restriction on equity release?

Because equity release is exclusive to senior homeowners, you must be at least 55 years old to apply for a lifetime mortgage or home reversion plan. There may be some lifetime mortgages that are only available to people over 60, 65 or 70 years old. But as long as you are at least 55 years old, you’ll have plenty of options to release equity as a senior.

When you want to apply for equity release as joint homeowners, the youngest homeowner must meet the age requirement, meaning a couple aged 57 and 54 would not be able to apply just yet. 

Is there an upper age limit for equity release?

Most lenders do not apply an upper age limit to their lifetime mortgages or home reversion schemes. In fact, Martin Lewis states that equity release is best left as late as possible. This is because there is naturally less time for the lifetime mortgage to accrue interest and become so expensive to repay. 

Where can you get equity release for over 70s?

Over 70s have a number of options when seeking an equity release loan. They can use companies like Aviva or search high-street banks. Most of the time, the company that provides you with mandatory financial/legal advice can also help to find you the most suitable deals and make the application. There is a fee for these services which can be as high as 3% of your loan value. 

Just remember to only opt for financial services and lenders that are authorised and regulated by the Financial Conduct Authority. You should also give preference to lenders that are members of the Equity Release Council because they offer additional protection, such as the negative equity guarantee. 

This guarantee states that a lender cannot try to recover any debt that exceeds the money raised from your property sale. For example, imagine you had a lifetime mortgage for 20 years and then had to move into long-term care. If the total debt becomes bigger than what your property is now worth when it is time to repay, only the sale proceeds need to be paid to the lender. They cannot chase you for the additional debt. 

Equity release for over 70s – a good idea?

Equity release can be a good idea for those who need credit but have no better alternatives. It is usually recommended to use equity release loans as late as possible. Martin Lewis himself has been on TV and stated to use them as late as possible. Considering equity release loans after 70 could allow you to release more equity or get a better deal. 

Why consider equity release?

Equity release is usually chosen as a way to make retirement more comfortable, either as a financial cushion or to pay for home renovations and annual holidays. Some retirees choose to give some or all of the loan to family members to help them buy a home. 

The main reasons to consider equity release are:

1. The money is paid as a lump sum or drawdown
2. The money can be spent as the homeowner desires
3. The money is not taxed
4. The homeowner keeps living in their home as normal
5. The homeowner does not pay rent and cannot be evicted for normal reasons
6. The homeowner does not make any monthly repayments
7. The homeowner can volunteer repayments to reduce the debt and maximise the estate they pass on

Does equity release affect your state pension?

Taking out a lifetime mortgage or home reversion plan will not stop you from receiving your state pension in full. But equity release can affect eligibility to receive means-tested benefits that take into account your wealth before awarding payments. 

Pension Credits is one benefit that is means-tested and can be affected by equity release. Your Pension Credit payments can be reduced by having £10,500. You might lose all access to Pension Credits, which can then stop you from receiving a council tax reduction. 

This is best discussed when you receive financial advice.