Equity Release Age Limits & Alternative Options for Under 55s

With how equity release products are advertised on TV, you’d be forgiven for thinking that only retired homeowners can access the equity tied up in their homes. But if you hold equity in a property, there are no age restrictions on when you can access it.

In this article, we’ll explore the different ways you can release equity from a property you own regardless of age and why using a broker is the most secure route to getting the best deal.

What is the minimum age for equity release?

You can apply for an equity release plan at age 55. When people talk about equity release products, they usually refer to lifetime mortgages or home reversion plans. These are aimed at homeowners who have retired or are nearing retirement and are reserved for those aged 55 and over.

If there are joint owners, eligibility is worked out according to the age of the youngest. Other owners can only take out an equity release product if those under 55 transfer their share of the equity to them.

But the broader meaning of ‘equity’ in home-related matters is the percentage of your home you own outright. You are entitled to access it at any age using other methods of borrowing, such as remortgaging.

Is there a maximum age?

There’s no maximum age for lifetime mortgages and home reversions. These products are designed to provide money for your retirement and then run until you pass away or move into long-term care, so there is no official upper age limit. However, some providers apply their own restrictions of between 80 and 100.

If you’re under 55, there are other ways of accessing the equity from your properties, and some of these will have age limits and restrictions.

Releasing equity after 55

When you reach 55, remortgaging, home improvement loans, downsizing, or selling options remain open to you, provided you meet the lender’s other criteria. However, you may also qualify for equity release products.

Aside from being within the age bracket, you will need to have outright ownership of a property worth £70,000 or more to qualify for a lifetime mortgage. This allows you to take a lump sum lifetime mortgage or draw down a regular income from your equity with no monthly payments.

Your age will impact the percentage of equity you can release:

• From 55, you can release a maximum of 27%
• From 65, you can release a maximum of 40%
• From 75, you can release a maximum of 50%
• From 85, you can release a maximum of 60%

Applicants with reduced life expectancy can apply for an enhanced lifetime mortgage. Based on the results of a medical questionnaire, this may allow them to borrow above these standard rates.

Home reversion is a type of equity release plan that requires you to sign over a percentage of your property to a provider in exchange for a cash lump sum below market rates. This type of borrowing is only available to people over 60 and is rarely recommended by advisors.

How a broker can help you avoid age restrictions

Whichever route you choose to access the equity in your home, you want maximum benefit for minimum cost. Several options are open to you, each with its advantages and disadvantages, regardless of your age.

Your best bet is to contact an equity release advisor who can provide later-life lending advice to borrowers of all ages and circumstances. They will be able to match you with the lender best placed to offer a great deal to somebody in your age bracket.

They will discuss your financial situation and current plans to ensure you choose the right product for your long-term situation and make the best choice for your retirement.

You’ll also have someone to guide you through what can be a complex area of borrowing.

Calculate how much equity you can release based on your age

Using our equity release calculator below, you can get an idea of the amount of capital you could release from your home. The results are based on your age and the value of your property.

Options if you are under 55

Traditional options aren’t available if you’re under 55 in the UK and interested in equity release. However, you can consider remortgaging to a higher loan-to-value (LTV) ratio, taking out a home improvement loan, exploring a retirement interest-only mortgage, or selling your home.

Each of these alternatives has its criteria, benefits, and considerations.

• Remortgaging to release equity: This follows the same process as taking out your initial home loan, and you will need to meet the providers’ criteria. If you can, it’s usually best to wait until your fixed-rate deal has ended so you don’t pay an early settlement fee. You might even benefit from a lower loan-to-value (LTV) banding if the value of your property has risen sufficiently. Lenders’ age caps vary but with the right lender, you can find deals that will take you to 95 years old.
• Home improvement loan: These can be secured or unsecured. The maximum amount for an unsecured loan is usually £25,000. If you are planning a major job, you can typically borrow much more if the loan is secured, and you’ll benefit from more preferential rates. You must be 18 years old to apply for a loan and most lenders cap your age at the end of the term at 70-75. If you will be older than 75 at the end of the term, you’re best advised to find a specialist lender or take professional advice on equity release.
• Retirement interest-only mortgage: Similar to lifetime mortgages, RIO mortgages are available from the age of 50. You can usually borrow up to 50% (in some cases, 55%) of the value of your main residence with monthly contractual payments that cover the interest on the loan. Lenders will require evidence that you can afford the repayments from your retirement income.
• Sell your home: If you move to a cheaper home or sell an investment property, you will pocket all the equity after your expenses are paid. There is no age limit on selling property.

Get matched with a broker who specialises in all aspects of borrowing to release equity

Current regulation states that any firm offering equity release must offer clients advice. This is fine, but unless the advice you receive is independent, you can’t be certain it is in your best interests.

The advisors we work with are fully qualified to advise on equity release. This means they will compare the UK lending market and advise on the most suitable products according to your circumstances.

After a brief chat, our broker-matching service will handpick an advisor with knowledge and experience in equity release borrowing that meets your needs.

Call today on 0330 818 7026 or enquire online to arrange a free, no-obligation chat.