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Equity Release in Scotland

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: December 9, 2021

Equity release can be a great way for homeowners over 55 to access the capital they’re built up in their property. The market for it in Scotland has been growing in recent years, with more and more equity release providers extending their reach north of the border.

This form of retirement finance is showing no signs of slowing down, so we’ve put together this guide to equity release in Scotland.

Here, you’ll find out how widely available it is, how it works and how to find the right provider for your needs and circumstances.

Is equity release available in Scotland?

Yes. Equity release was slower to take off north of the border compared to England, but in recent years, a growing number of equity release providers have started covering Scotland.

The main difference between Scotland and elsewhere in the UK is that there are fewer equity release providers available in certain parts of the country, so seeking specialist advice is highly recommended.

What is equity release?

Equity release is a type of retirement finance that allows homeowners over 55 to access the capital they’ve built up in their property in the form of a tax-free loan. This can be used for any legal purpose and is not usually repayable until the last surviving homeowner dies or goes into long-term care.

You can read more about equity release in our in-depth guide.

Why was equity release slower to take off in Scotland?

Equity release did not take off as quickly in Scotland compared to the rest of the UK. One school of thought on why this was the case is that many Scottish homeowners have close family ties and traditions. There’s a strong culture of leaving behind an estate and inheritance north of the border, and some of the older equity release products compromised this.

One of the reasons the market has rapidly caught up with the rest of Britain could be because of the influx of more flexible equity release options for retired homeowners. For instance, some schemes include an Inheritance Protection Guarantee that allows customers to ringfence a portion of their property to safeguard some family inheritance.

There has also been an influx of lifetime mortgage options with ‘no negative equity’ guarantees and the option to make capital repayments for those who want to leave some equity behind for their beneficiaries.

These flexible products have helped the equity release market in Scotland grow, and as a result, many of the leading providers have expanded into the territory. With options now plentiful, speaking to a specialist equity release broker who can help you find a scheme that’s tailored to your needs is the best place to start.

What types of equity release are available in Scotland?

Two types of equity release are available in Scotland…

  • Lifetime mortgagesThis is a loan secured against your property which is paid out in instalments, as a lump sum or a combination of both. Read more in our in-depth guide to lifetime mortgages.
  • Home reversion plansThis type of equity release involves selling all or a portion of your property to an equity release provider in exchange for a lump-sum payment or monthly instalments. Read more in our in-depth guide to home reversion plans.

Warning: Since home reversion plans involve relinquishing full ownership of your home, most experts who advise on retirement lending in Scotland don’t recommend this type of equity release. They will likely suggest that you consider applying for a lifetime mortgage instead.

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How does it work?

Equity release in Scotland works exactly the same as it does in England. The amount of tax-free cash you can access with a lifetime mortgage depends on two factors…

  1. The age of the youngest applicant
  2. The value of the property

You can find out exactly how much equity you could release in our standalone guide, How Much Equity Can I Release?

Lifetime mortgage options for Scottish equity release customers

The way equity release pays out will depend on the type of plan you choose. Most experts would recommend a lifetime mortgage over home reversion, and they come in three types…

  • A lump sum mortgage: With this type of lifetime mortgage, the homeowner receives the funds as a single lump sum and interest payments are not mandatory during the term. The debt only needs to be paid in full at the end of the agreement.
  • A lifetime drawdown mortgage: Sometimes referred to as a flexible lifetime mortgage, these plans allow customers to take a small amount of capital at the outset and draw down the rest of the funds as and when they choose to. Interest only accrues on the capital that has actually been drawn down.
  • An income lifetime mortgage: Homeowners can claim a regular income from their equity release by taking this type of lifetime mortgage.

In addition to the three main types of equity release, some providers in Scotland will allow homeowners to enter bespoke agreements, depending on their circumstances. For instance, you could negotiate a deal with a high loan-to-value ratio and low-interest rates if you can evidence that you’re in poor health and have a lower life expectancy.

For these types of agreements, a specialist equity release broker is recommended as they will know exactly which providers are best positioned to help a customer with your exact needs and circumstances. They can also offer personalised advice every step of the way.

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Who are the best equity release providers in Scotland?

The leading equity release providers in Scotland include Aviva, Canada Life, Hodge, Legal & General, Pure Retirement and One Family, but approaching one of these companies directly is not recommended. If you were to do that, you would only have access to their products.

This could potentially mean missing out on higher loan-to-value ratios and lower interest rates elsewhere. Unless you have access to the entire market, including the niche providers you won’t find through a Google search, you can’t be sure you’re getting the best deal.

The best equity provider for you isn’t necessarily the biggest name in the business or the one with the highest star rating online, it’s the provider who’s best positioned to offer favourable rates to a customer with your exact needs and circumstances.

The right broker will be able to find that provider for you, and this is where we come in. We offer a free broker-matching service that will pair you up with an expert who helps customers just like you every day. The equity release advisor we match you with will be one we’ve vetted and trained ourselves, so we can guarantee you a five-star service.

Not all equity release advisors are the same. Some specialise in customers with bad credit, while others have made a name for themselves helping customers with life-limiting health issues. Whatever your specific circumstances, we can find a broker for you.

Are there any equity release providers who don’t cover Scotland?

All of the leading equity release providers will now at least consider lending in mainland Scotland, but keep in mind that some have geographic restrictions in place.

For example, Hodge, Legal & General, Liverpool Victoria and Pure won’t lend for properties on the Scottish islands. You might also find that some providers impose restrictions if you’re home is based in the Scottish Highlands.

If you’re based outside of Scotland’s major towns and cities, seeking professional advice is doubly important. You want to find the right equity release provider first time, as being declined can harm your credit report, and even if you are accepted, you might get a less favourable deal.

The right equity release broker will take all of your need and circumstances, including geographic factors, into account and make sure you’re paired up with your ideal provider the first time of asking.

Get equity release advice from an expert today

Call 0808 189 2301 or make an enquiry online and we’ll introduce you to your perfect equity release broker today. The advisor we pair you with will have in-depth knowledge of the Scottish market and the right expertise to help someone with your exact profile.

A non-obligation consultation with an equity release expert won’t cost you a penny, but their advice could help you save time, money and potential disappointment in the long run.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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