Equity Release in Scotland

For a time, equity release and lifetime mortgages in Scotland were hard to come by. Few to no providers offered them as an option, and there was also a perceived lack of demand. That is no longer the case, however.

Here, we examine equity release schemes in Scotland, the eligibility criteria surrounding them, and who to approach for the best product for you.

Can you get equity release in Scotland?

Yes, you can now release equity from your home in Scotland as you can in the rest of the UK. Equity release providers lend you money secured against your home and charge interest on the amount you borrow. The loan is repayable upon your death or a move into full-time care. It is usually repaid through the sale of your property.

The Scottish equity release schemes currently offered are:

Lifetime mortgage

You take out a loan with a lifetime mortgage, using your property as security. You remain the owner of your home, and in Scotland, the funds can be released to you in instalments or as a lump sum. Some providers will allow you to do a mixture of both.

These different types of lifetime mortgage options are called:

• A lump sum mortgage: You receive the entire loan at once.
• A lifetime drawdown mortgage: You can take your loan instalments.
• An income lifetime mortgage: You receive a regular payment as an income.

Interest is accrued on the amount borrowed over the entire lifespan of the mortgage. You do not have to make any repayments until you pass away or move into full-time care.

Interest-only equity release

Interest-only equity release is similar to a lifetime mortgage, but you make regular repayments to cover the interest accrued. As a result you only have to pay back the original amount borrowed from your estate when you die or move into full-time care is therefore reduced. This means you can protect how much your estate is worth when you pass away.

Home reversion

With these plans, you sell a portion of your home to a scheme provider and are given a lump sum or equivalent monthly instalments in return. Home reversion plans are commonly not recommended by mortgage advisors as you lose ownership of that amount of your property – though you can continue to live in it rent-free.

Other disadvantages include the price you achieve for selling a portion of your home being often less than market rates. Plus, these products are usually only available to those who are over 60, if not older.

However, an advantage is that the amount you own of your home remains the same, so you will know how much of your property you have to leave in your will.

How much can you release?

If you’d like to find out how much equity you may be able to release from your property, take a look at our easy-to-use equity release calculator here:

Does equity release work any differently in Scotland?

No, they work the same as the rest of the UK. Your potential lender will want you to meet certain eligibility criteria.

They vary from provider to provider but generally would focus on:

• Your age: You need to be over 55 for these products.
• Your life expectancy: If your life expectancy is short, you may find more providers available to lend you your maximum amount.
• Your income: The higher, the better. The source will also be taken into account.
• Your credit history: Lenders favour those with good credit histories. Those with bad credit can still be eligible but may not be able to access as much or at a preferential rate.
• Your property’s value: Lenders require your property to be worth at least £70,000, but others will demand it be higher.
• Your location: Some providers only offer equity release for particular areas.
• Your property type: Lenders usually prefer standard construction homes. Those in a listed property may have fewer lender options.

While the rules are not different in Scotland, some issues are more common north of the border, which can be a key consideration. For example, in addition to only lending to certain property types, some lenders will only consider equity release applications from mainland Scotland or its key towns. That doesn’t make finding a lender much more difficult if you live in the Highlands or a listed home.

How a broker can help with equity release

A broker can be invaluable if you want to release equity from your home in Scotland. The process can be complex and overwhelming – which a broker can cut through.

An expert in equity release products and providers in Scotland will advise you on who the best lenders are. That means your chances of a successful application are improved. It also means you can maximise the amount released at the lowest available rate.

The brokers we work with will consider every aspect of your personal and financial situation to ensure you only apply for a product for which you are eligible. They will guide you through every step, making your entire application easier. The result is that you can save yourself time, stress, and money.

If you contact us, we’ll arrange for an equity release specialist to contact you directly for a free initial discussion.

Who are the best equity release providers in Scotland?

No one equity release provider in Scotland is always the best. The best provider for you will be the one that you meet the requirements for and answers your needs most closely. That means the provider loans you the maximum amount at an affordable rate – something a broker could help you achieve.

The majority of the UK’s mainstream providers now offer equity release schemes to mainland Scotland. Some, as mentioned, will have geographical restrictions within their eligibility criteria. You will find that household names like Scottish Widows Aviva, Canada Life and Legal & General are all potential options. But that is not an exhaustive list by any means.

Speak to an expert on equity release schemes in Scotland

The complexity of applying for an equity release scheme in Scotland can be made far easier by using a broker. The brokers we work with have access to and in-depth knowledge of the entire market. They can advise you on the most suitable product for you and the most appropriate lender.

We run a free, no-obligation broker matching service to put you in touch with the best advisor for you. Call 0330 818 7026 or make an enquiry so we can match you with an equity release specialist for a free, no-obligation today.