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About Standard Life Equity Release
- Standard Life has looked after retirement needs for around 200 years
- For equity release, we've partnered with experts Key Retirement Solutions
- Key trades as Standard Life Equity Release to provide content and tools on our website and help with your enquiry
What is equity release?
Equity release is a way to help boost your finances in later life by unlocking some of your home’s value.
Your property’s worth, minus any existing mortgage or loans secured against it, is its equity. This equity is often passed on as an inheritance; however, through equity release, you can access some of your property’s worth tax free.
Our equity release products are available for homeowners aged 55-84 whose property is worth at least £99,000. However, not all equity release plans work the same. This page is here to help make the differences clear so you can make the right decision for your circumstances.
This is a lifetime commitment - check the benefits and drawbacks before going ahead.
How does equity release work?
The type of equity release you choose will determine how it works. One type is a lifetime mortgage; of which there are two types – lump sum and drawdown. We’ll go into a bit more detail on those below.
The other form of equity release is a home reversion plan. Home reversion plans are different to a lifetime mortgage. With a home reversion plan you will sell part or all of your home to the home reversion company at less than its market value. In exchange you will receive a tax-free lump sum. You will no longer own your own home, although you have the right to live there rent free.
But the main premise of a lifetime mortgage is that it could allow you access to at least £15,000 in tax-free cash by securing a loan against your property. However, unlike most other secured loans, there are typically no monthly repayments for you to make – unless you choose to.
That’s because the loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant either enters long-term care or passes away. That means you could access thousands of pounds in tax-free cash to help boost your later life finances without the worry of budgeting for repayments.
How much you could release will depend on a few different things, including the value of your property, any existing loans or mortgage secured against it, and your age.
Usually, the older you are, the more you’re able to release. But remember, if it’s a joint application, the age is based on the youngest applicant, rather than the oldest.
It’s also important to note that if you have an existing mortgage or any other secured loans against your property, they’ll have to be paid off first. You can use the money you release to do that – but doing so will reduce the amount you have to spend on other things.
Benefits and drawbacks of equity release
Your lifetime mortgage can be personalised to your wants and needs. There are many features and benefits available to help ensure the plan you receive is the right one for you.
Benefits
- You can unlock cash from your home, tax-free, to help meet your needs in later life
- You’ll always retain full ownership of your home and can stay in it for as long as you wish with a lifetime mortgage
- You can choose to make reduced or no monthly repayments to suit your circumstances with a lifetime mortgage
- You’ll never owe more than your home’s worth with a lifetime mortgage
- You may be able to remortgage your lifetime mortgage in the future to release further funds or secure a better interest rate – this isn’t guaranteed and may be subject to early repayment charges
Drawbacks
Your equity release adviser will also outline the following important things to think about:
- A lifetime mortgage is a loan secured against your home and subject to compound interest, meaning the amount you owe can grow quickly
- Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits
- Equity release may leave you with limited or no property equity remaining
- Equity release will reduce your financial options in the future
- A lifetime mortgage is a long-term financial product and is not designed to be fully repaid until the death or entry into long-term care of the last remaining borrower, otherwise early repayment charges may apply
The types of lifetime mortgages
As we mentioned earlier, there are two main types of lifetime mortgages; a lump sum lifetime mortgage and a drawdown lifetime mortgage. Both can give you access to some of the value that's tied up in your property, but how you receive your tax-free money will be determined by which type of lifetime mortgage you choose.
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Lump sum lifetime mortgage
A lump sum lifetime mortgage is where you receive all the money you release in one go and there are typically no monthly repayments to make unless you choose to.
With our lifetime mortgages you could release from £15,000 to £1.5 million, depending on your personal circumstances. When you complete your plan, you’ll receive all your tax-free cash in a single lump sum.
This can be ideal if you have several expenses to cover at once, such as repaying existing debts, home improvements and gifting to a family member.
A lump sum lifetime mortgage could cost more over time as interest is applied to the full release amount from day one.
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Drawdown lifetime mortgage
A drawdown lifetime mortgage is similar to a lump sum lifetime mortgage, in that you still get access to tax-free money and again there are typically no monthly repayments to make unless you choose to.
However, instead of receiving your funds in one lump sum, you can take the money as and when you need it following an initial release of at least £15,000.
This could be more suited to your needs if you don’t need all your money upfront and want access to cash later down the line. It could also work out cheaper – as you only pay interest on the money you release.
Drawdowns are subject to the prevailing, fixed interest rate at the time, which may be higher than the original interest rate. A drawdown facility is not guaranteed as the lender has the right to withdraw it.
Horizon interest reward lifetime mortgage
Save thousands in interest over the life of your plan by making interest payments, helping you reduce your total cost of borrowing and giving you more control over your financial future.
With a Horizon interest reward lifetime mortgage, you receive an interest rate discount in comparison to the equivalent, comparable Horizon lifetime mortgage by making monthly interest payments. The longer you commit to making payments, and the more interest you pay, the bigger the discount.
How Marge saved over £116,000 with her Horizon interest reward lifetime mortgage
Case study example
Marge is a 71 year old divorced retiree looking to release £119,089 from her £360,875 property to gift money to her grandchildren. By committing to paying 100% of the monthly interest for 15 years, Marge is rewarded with a 0.40% interest rate discount.
Through this interest rate discount, and by paying monthly interest payments for 15 years, Marge can save more than £246,000 over 20 years compared to making no repayments through the same Standard Life Home Finance Horizon lifetime mortgage.
| Marge’s story | ||
|---|---|---|
| Product name | Horizon Lifetime Mortgage | Horizon Interest Reward Lifetime Mortgage |
| Initial loan amount | £119,089 | £119,089 |
| Interest rate | 6.14% MER* | 5.74% MER* (with 0.40% discount) |
| Monthly payments | £0 | £570 (for 15 years) |
| Total cost of borrowing after 20 years | £405,346 | £158,433 |
| Net saving vs lifetime mortgage | £0 | £246,913 |
*Monthly Equivalent Rate
Figures based on a 71-year-old applicant (average UK ER customer – MM H1 2023)owning a £360,875 valued home (average UK house price MM H1 2023) – releasing £119,089. Example rates only.
Is equity release regulated?
Yes, equity release is regulated.
Standard Life Home Finance plans meet Equity Release Council standards and come with a no negative equity guarantee, meaning you can’t owe more than your home’s worth or pass on any debt through equity release. However, it’s important to remember that a lifetime mortgage may leave you with limited or no property equity remaining, and it’ll reduce your financial options in the future.
How can I use equity release?
If you’re thinking about using some of the value of your home to support your later life finances, you’ll likely already have things in mind you want to spend the money on.
And while everyone has different wants and needs, we thought we’d highlight the most common reasons people choose equity release.
- Clearing existing debts
- Paying off existing mortgage
- Making home and garden improvements
- Gifting money to family
- Going on holiday
- Replacing the car
Clearing your existing debts and monthly repayments could help transform your later life and give you the retirement you deserve. You should always think carefully before securing a loan against your home to repay existing debt.
Take away the stresses of paying off your existing mortgage in later life and retain full ownership of your home through a lifetime mortgage.
Make sure your home meets all your wants and needs; whether that’s bringing it up to date or making changes in preparation for the future. Subject to criteria.
Whether it’s to help with a house deposit, new car, or simply to reduce your loved ones’ financial worries, you can gift a living inheritance using some of your home’s value.
Later life is a time to complete your bucket list. By unlocking some cash, you can go and see the world.
By releasing some of the value tied up in your property, you could finally get that car you’ve always dreamed of, and have more time to enjoy it.
Other options
Before going ahead, your equity release adviser will discuss your alternative options.
- Home reversion, a type of equity release where you sell all or part of your home to a reversion company for less than market value
- Retirement interest – only mortgage
- Later life residential mortgage
- Interest – payment lifetime mortgage
- Downsizing
- Unsecured lending
- Using existing assets
- Support from friends or family
- Or check is equity release right for me?
Equity release costs
Knowing the costs associated with equity release and how to help manage them is important.
Here are some helpful guides to give you a better understanding:
Compound interest explained
Lump sum vs drawdown lifetime mortgage
Equity release advice
You need to get expert advice before you can go ahead with equity release –we’ll introduce you to equity release specialists Modern Lending Advisers, who offer honest and bespoke advice. All equity release advice relates to Standard Life Home Finance Horizon lifetime mortgages only -a loan secured against your home Unless you decide to go ahead, Modern Lending Advisers' service is completely free of charge, as their fixed advice fee of £599 is only payable on completion of a plan.
Find out more about equity release
If you'd like to know more about equity release, we have several free tools that can help.
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Get your equity release guide
Download your free digital guide to equity release, explaining everything you need to know. We’ll also pop one in the post for you, too.
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Check your eligibility
Check to see if your property is likely to be suitable for equity release with our free eligibility checker. It’ll only take a couple of minutes.
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Leave us your details and we'll call you back
Speak to a member of our team to see if equity release is suitable for your circumstances.
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Standard Life Equity Release is a trading name of Key Retirement Solutions Ltd. Registered in England No 02457440. Registered Office: Baines House, 4 Midgery Court, Fulwood, Preston PR2 9ZH. Equity release content and financial promotions have been provided and approved by Key Retirement Solutions Ltd who are authorised and regulated by the Financial Conduct Authority. Any personal data provided on this page will be shared with Key Retirement Solutions Ltd who will use the information to contact you about your enquiry.
Businesses in the Phoenix Group will receive a financial benefit from businesses in the Key Group from the sale of each Lifetime Mortgage or other financial benefits where a customer uses any service provided by businesses in the Key Group typically up to a maximum of 3.65% of the value of the loan or up to 20% for services provided to each customer.
Key Retirement Solutions Ltd used the Standard Life brand under licence.