Equity Release Northern Ireland

Equity Release is a way to use the money you have put into your home to release cash later in life. Here we explore how it works, the pros and cons and how to decide if it could be the right option for you.

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What is Equity Release?

Equity Release is a kind of financial product available to people aged 55 and over. The idea is to allow you to borrow money against your home, often to boost retirement funds. It’s a way of remaining in your property rather than releasing cash from the sale of your home.

What are the Equity Release options in Northern Ireland?

The most common Equity Release products are lifetime mortgages and home reversion. You don’t necessarily need to have fully paid off your mortgage to access these but you will need to have a good amount of equity. In other words, your home must be worth more than you owe on it via a mortgage.

With both types of Equity Release mortgages, you secure a loan on your property. The debt is only repayable when the homeowner dies or moves into long-term care.

Lifetime mortgages

With a lifetime mortgage, you borrow an amount against your home with a fixed or capped interest rate. It is almost like a mortgage in reverse – you receive a lump sum and then through monthly interest, the debt grows as time goes on.

With some lifetime mortgages you can pay off some of this interest if you wish. When you die or move into long-term care, the debt is due for repayment.

One of the big misconceptions about lifetime mortgages is that you no longer own your home. This is not the case – the home remains 100% yours even after your death. Your dependents either repay the loan from your estate or sell the property to settle the debt.

Home Reversion

A home reversion plan is another way for older homeowners to release tax-free cash. With this type of product, you sell your home – or a portion of it – to a home reversion provider. In return, you receive a lump sum or regular payments as set out in your contract, and you live in the home rent-free until the end of your life.
You can often protect an amount of the value to leave to your children or dependents. When you die, the plan provider arranges to sell the home and shares the proceeds in line with the agreement.

Things you need to know about Equity Release in Northern Ireland

Equity Release schemes can seem very persuasive – but there are many other options to consider as part of your financial planning. We advise anyone considering Equity Release to speak to a specialist Mortgage Broker for financial advice.

Equity Release can be a very useful source of income if you have no other options, but there are other solutions that may be more valuable to you and your family members.
The big challenge with Equity Release is that the longer you live, the greater the debt becomes. Interest rates are usually higher than with a standard mortgage, and the amount you owe grows quite fast.
This is, of course, how lenders profit from Equity Release products. You might receive a £25,000 lump sum, but a decade or two later, that debt could reach £100,000. Repaying this size of debt will reduce how much your beneficiaries receive from your estate.

On the positive side, reputable providers offer a ‘no negative equity’ guarantee. It means that you can never owe more than the market value of your home. Any lender that is a member of the Equity Release Council will abide by this guarantee and various other guidelines designed to protect you as a customer.

Is releasing equity the right option for you?

Forms of Equity Release like lifetime mortgages and home reversion are not the only way to access the money tied up in your property.
Perhaps the most straightforward way to release equity from your home is to downsize. If, for example, you sold your home for £450,000, you could buy a smaller property at £350,000 and put the £100,000 difference towards your retirement. It gives you greater control of your money and means you are not exposed to debt.

This is a great solution if you have fully paid off your mortgage, but is also a way to pay the outstanding loan and become mortgage-free. Do check whether an early repayment charge applies to your mortgage deal, however, as these can prove expensive.

Another option is to consider a retirement interest only mortgage (RIO). Available to people over 55, this is a loan secured against your home. You pay the interest each month, which means the amount you owe doesn’t increase over time.

The loan can be used for most purposes, including paying off an existing mortgage. You don’t have to repay the debt until you, or the last remaining borrower, die or move permanently into long-term care. 

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We will work with you to understand your situation and needs, then develop personalised advice to help you achieve your goals.

How can Mint Mortgages & Protection help you with Equity Release in Northern Ireland?

We work with many people who want to release equity from their homes – whether they want to fund home improvements, pay off other debts, boost retirement income or gift money to their loved ones.

We will explore your unique financial situation, whether moving home is an option, and the risks and benefits of each approach. It’s important that we help you explore everything in detail so that you can make an informed decision.

For an initial chat with a Financial Adviser, free of charge, get in touch today.

Mint Mortgages and Protection is an Appointed Representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading name of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.

Your home may be repossessed if you do not keep up the repayments or any other debt secured on it. 

An Equity Release product will reduce the value of your estate, will not be suitable for everyone and may affect your entitlement to state benefits. To understand the features and risks please ask for a personalised illustration.