What is equity release?

Equity release in the form of a lifetime mortgage is a way to help boost your finances in later life by unlocking some of your home’s value without the need to sell or give up ownership of your property.

Your property’s worth, minus any outstanding 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 at an earlier date, tax-free.

There are two main forms of equity release: lifetime mortgages and home reversion plans. At Standard Life Home Finance, we only provide lifetime mortgages.

Our Horizon lifetime mortgages 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.

Lifetime mortgages

A lifetime mortgage is a form of equity release; of which there are two types - lump sum and drawdown.

With a lifetime mortgage, you could access 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 wish to do so.

That’s because the loan, plus compound interest, is repaid when your lifetime mortgage comes to an end, which is typically when the last remaining applicant enters long-term care or passes away.
At this time, your home is usually sold and the proceeds of the sale are used to repay the loan, leaving any money left over to your beneficiaries.

If you opt for a Horizon Interest Reward lifetime mortgage, set monthly repayments are required for a specified period of 5,10 or 15 years in order to obtain a discounted interest rate.

How much can I borrow?

How much you can release is dependent on the value of your property and your age. Usually, the older you are, the more you’re able to release. On joint applications, the age is based on the youngest applicant, rather than the oldest. The amount of equity available to you to release is calculated as a percentage of your property’s worth, otherwise known as the loan-to-value. The more value from your home that you wish to release, the higher your loan’s interest rate will be.

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The benefits of a Standard Life Home Finance lifetime mortgage

The lifetime mortgages available from Standard Life Home Finance provide access to several features. With all Standard Life Home Finance lifetime mortgages, you can:

Make voluntary repayments

With any Horizon lifetime mortgage you can make ad-hoc voluntary payments of up to 10% of the original loan amount each year without any early repayment charges (ERCs). This is in addition to your contractual payments if you choose a Horizon interest reward lifetime mortgage.

Retain ownership of your home

You will not be required to sell or sacrifice ownership of your property during the term of your lifetime mortgage. Subject to T&Cs.

Remain living in your home

You’ll have the right to live in your home during the term of your lifetime mortgage, or until you or the last remaining applicant move into long-term care.

Move home in the future

If you need to move to a different property in the future and it doesn’t meet the lender's criteria, you can repay your loan in full without facing any ERCs.

Avoid negative equity

Our no negative equity guarantee feature means you can never owe more than your property is worth. 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.

Remain on a fixed interest rate

You’ll be protected against any future interest rate increases with an interest rate fixed for life. With Horizon Interest Reward, your discounted interest rate is fixed for life providing you make all of your agreed monthly interest payments.

Explore our lifetime mortgages

What to consider before taking out a lifetime mortgage

When considering equity release, we want you to be aware of the benefits and drawbacks before making a decision.

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 Horizon lifetime mortgage
You can choose to make reduced or no monthly repayments to suit your circumstances with a Horizon lifetime mortgage, subject to criteria. Or with a Horizon interest reward lifetime mortgage you'll be rewarded with a discounted interest rate by paying off some or all of the interest each month over an agreed term of 5, 10 or 15 years
You’ll never owe more than your home’s worth with a Horizon lifetime mortgage
You may be able to remortgage your plan in the future to release further funds or secure a better interest rate, although this isn’t guaranteed and may be subject to early repayment charges

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 your estate’s value and may affect your entitlement to means-tested benefits
A lifetime mortgage may result in limited or no property equity remaining and will reduce your financial options in the future
You should always think carefully before securing a loan against your home to repay existing debt
The loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care
An advice fee may apply. Advice fees vary among independent financial advisers, so we recommend discussing this with your adviser if you are unsure
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

Getting the right advice

If you are considering a lifetime mortgage, it is required that you first receive advice from a qualified equity release adviser who will help you understand your options and advise on what is right for you.

All Equity Release Council members agree to abide by Equity Release Council rules, guidance and standards, and have signed up to the Council's Statement of Principles. When finding your equity release adviser, you can search the Equity Release Council's database of registered equity release adviser members.