Equity Release

updated: January 22, 2010

The equity (value) you have in your home is the open market value less any mortgage or other debt held against it.  Equity Release is the term used for a way of getting cash from the value of your home without having to move out of it.

Equity release schemes are usually only available if you (and your spouse or partner) are at least aged 55 or over, although it is usually people in their 70s who will benefit most.

Equity release first started in 1965 with very few products available.  In 1972 the first Home Income Plan was introduced to give borrowers an income from the equity in their homes rather than a lump sum.

By 1988 a new style of plan was introduced which is now not permitted.  Again they were called home income plans but part of the income received was used to pay the interest on the loan on the property.  When interest rates started to rise the income was not sufficient to pay for the loan and so the loan increased until it exceeded the value of the home.

This was when the trade association, SHIP (which stands for Safe Home Income Plans), was set up.  The main purpose of SHIP is to prevent borrowers from taking out schemes which will result in their losing their homes, or leaving debts for their children.

A feature of our equity release service to clients is that we will only recommend schemes from members of SHIP.

To obtain further information please click here for our pdf Guide to Equity Release.