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Equity Release Qualification - July 2020

How Do You Qualify for Equity Release?

Equity Release Qualification is gained by candidates who must be Homeowners over 55 years of age.

In the case of joint applicants the age of the younger applicant is used by the lender.

There is generally no maximum age for Equity Release although some lenders may specify 90.

Property can be held jointly in two ways; either as joint tenancy or tenants in common.

Joint Tenancy is the norm in UK and is preferred by lenders.

Some Lifetime Mortgage providers do not accept properties owned as Tenants in Common.

You may want to check your own situation, although it is likely to be Joint Tenancy.

Equity Release Property Requirements

Minimum property values vary from company to company, but a typical minimum is £70,000 for a Lifetime Mortgage.

Most Equity Release companies are prepared to lend against freehold properties valued up to £1m (£2m in London) and some have no maximum value.

The property must be in a condition of repair that is acceptable to the lender. While the lender will not expect perfection, it must be remembered that the lender will be making funds available based on the assumption that it will be able to recoup them once the property is sold at the end of the mortgage term.

Any existing loans or mortgages secured on the the property must be repaid and this can be done using the proceeds of the Equity Release advance with the balance going to the borrower. This is necessary as the provider will require a first charge to be secured on the property.

For leasehold properties, minimum lease terms are applicable which vary across providers. Some lenders will vary the length required by the age of the applicant with a longer lease required for younger applicants.

The property must be of standard traditional construction, for example walls of brick, stone or block, roof of concrete, slate or stone tiles, or a type of non-standard construction acceptable to the lender. For example, some timber-framed houses and stone/flint properties are typically acceptable. The property must not have recently been affected by flooding, subsidence or other structural issues.

Certain types of property are not usually acceptable, such as studio flats, second or holiday homes, and park or mobile homes. Ex-local authority property, new build houses and flats may be considered on an individual basis.

The property will be subject to a valuation by the lender requiring a survey visit in some cases. (During the Corona virus restrictions, lenders are generally using a desktop valuation process so a visit would not be necessary)

The borrower will be expected to maintain the property to a level acceptable to the lender for the duration of the mortgage and to keep insurances in place.