Can You Get Equity Release if You Are Under 55?
Lead image: Michael Longmire from Unsplash
Equity release can be a great way for homeowners to release some of the cash that’s tied up in their property, and can be used to make home improvements, help fund a wedding or to give to your family.
Equity release is typically used for people over the age of 55 with the belief that getting equity release too young could eat away at your pension.
However, that being said, there are some lenders who might offer an equity release for those who are under 55, or you could look at remortgaging or getting a secured loan, as Lending Expert explains.
Why is Equity Release More Common for Those 55 and Over?
People looking to use equity release are generally required to be over 55 years of age – and this is the minimum requirement for products such as a lifetime mortgage or home reversion, the two most well-known types of equity release.
But why is this the case? Equity release is built to provide an extra source of money for retirement. The longer equity release is used, the more expensive it could be, meaning that at 55, you could be paying interest for another 30, 40 or 50 years and this is probably not sensible financially.
Not only could the interest start to wear away your savings and inheritance, it could mean that your beneficiaries may have to sell your home when you die to cover the outstanding debt – whereas they may wish to keep the home in the family.
What Are the Options if I’m Under 55?
If you are under 55, there are a number of other finance options that may be more suited to you than an equity release product, including the following:
remortgage secured loan
For those under 55 looking for finance close to an equity release, a remortgage could be a better option to consider. With a remortgage, you are essentially getting a new mortgage deal under more favourable terms, especially if you have already paid off a lot of your mortgage already. You can also get a lump sum, similar to an equity release product, but overall you should enjoy paying lower rates than your existing mortgage.
Homeowners may also want to consider a secured loan, where the loan is secured against a valuable asset (e.g. a property you own) based both on the amount of equity you own as well as the value of the property. Other factors such as your income and credit status also come into play here, so you could be eligible to borrow a far larger amount.
With a secured loan, you can borrow money without having to exchange this for equity in your property. However, it’s important to note that failure to keep up with repayments on a secured loan may lead to repossession of the home.
Will Age Always Impact Equity Release Products?
Yes, it is likely that age requirements will always be important with equity release. The rule of thumb is that you are able to release more equity the older you get. This is because the older you are, the closer the lender is to recovering their return on the investment.
There are over 100 equity release products and whilst there may not be particular schemes for people under 55, there are certainly enough options available across remortgaging, secured loans and personal loans to for any purpose that you need.
To discuss your requirements, please enquire with Lending Expert or speak to an advisor today on 0161 820 8099