Can I Release Equity From My House Under 55?
, by Matt Stevens
If you're under 55 and looking to release equity from your home, then you may have heard that equity release isn't an option. However, that's not entirely true. While traditional equity release products, such as lifetime mortgages and home reversion plans, are usually reserved for those aged 55 and over, there are still ways to access the equity in your property, even if you're younger.
In this article, we'll go over several alternative methods available to help you release equity from your home, regardless of your age.
Do I have to be 55 to get equity release?
Yes, most equity release schemes have age requirements. Lifetime mortgages, for instance, require the youngest applicant to be at least 55, while home reversion plans are typically available only to those aged 60 or older.
Although, if you're under 55, there are other options available that can help you unlock equity from your home - some of which offer similar benefits to traditional equity release.
Why can’t you use equity release before 55?
For lifetime mortgages, providers lend money that is repaid from the eventual sale of your home. This loan accrues compound interest, which could exceed the home's value over time. To manage this risk, most lifetime mortgages have a ‘no negative equity guarantee’, ensuring the repayment won’t exceed the sale value. As such, lenders set a minimum age limit for applicants.
Likewise, home reversion schemes have similar restrictions, often requiring applicants to be at least 60 in order to avoid a long wait before selling their share of the property. Both of these products are designed to provide financial support in retirement. While there is no official upper age limit, some providers set their own, usually between 80 and 100 years old.
Options to release equity if you’re under 55
1. Remortgage to release equity
If you've kept up with your mortgage repayments, you could consider remortgaging to release equity. This involves taking out a new mortgage to pay off your existing one, allowing you to access the equity you've built up.
That said, this might increase your monthly payments due to a higher loan-to-value ratio and interest rate. Unlike traditional equity release, you can do this while still paying off a mortgage. It's best to consider this option near the end of your current mortgage term to avoid early repayment charges.
2. Transfer of equity
If you have a joint mortgage with a partner over 55, you can release equity by transferring your share of the property to them, enabling them to become the sole applicant for equity release. Though, be cautious here: if you aren't married, transferring your share means losing your rights to the property and its equity if the relationship ends.
3. Home improvement loan
You could opt for a home improvement loan, either secured or unsecured. Unsecured loans typically extend to a maximum of £25,000, while secured loans allow you to borrow more at lower interest rates.
For example, you could consider a remortgage to pay for home improvements, depending on your current mortgage terms and the value of your home. To apply for any of these options, you must be at least 18 years old, with most lenders setting an upper age limit of 70-75 at the end of the loan term.
4. Retirement interest-only mortgage
Available from age 50, a retirement interest-only mortgage lets you borrow up to 50% (sometimes more) of your home's value, with monthly payments covering only the interest. To be eligible, you'll need to demonstrate that you can afford repayments from your retirement income.
5. Downsizing
Selling your home and moving to a smaller, less expensive property can help you access your equity. This option allows for flexibility in location and lifestyle, but involves adjusting to a smaller living space. The main advantage in this context is that there is no age limit for selling your property.
Releasing equity after 55
To qualify for a lifetime mortgage, you generally need to be at least 55 years old and own your property outright or have only a small remaining mortgage. The property usually needs to be valued at a minimum amount, which can vary by lender but is often higher than £70,000.
A lifetime mortgage enables you to access a lump sum or receive regular income from your home’s equity, with no monthly repayments required. The percentage of equity you can release depends on your age:
Age 55: Up to 27%
Age 65: Up to 40%
Age 75: Up to 50%
Age 85: Up to 60%
On the other hand, with a home reversion plan, you sell a percentage of your property to a provider in exchange for a cash lump sum, which is typically below market value. As mentioned, this option is only available to those aged 60 or older.
Looking to release equity? Speak to a mortgage broker
If you're considering releasing equity from your home, it's important to find the option that provides the maximum benefit at the lowest cost. Whether you're under 55 or older, there are several options available, each with its pros and cons.
A mortgage broker can provide expert advice tailored to your age, financial situation, and long-term plans, ensuring you find the right solution for your needs.
At The Mortgage Genie, our experienced brokers offer whole-of-market access, meaning we can compare all UK lenders to find the best equity release products for your circumstances. We'll guide you through the process, helping you navigate this complex area of borrowing with confidence.
If you'd like to speak with an expert who can guide you every step of the way, then be sure to contact our team at 01915809890. And why not see how much you could borrow up to today by using our remortgage calculator?
