The 7 Steps Of The Equity Release Process | April 2024
This article looks at the process involved with taking an equity release product.
How long does it take to release equity?
You can read more here about ‘how long does equity release takes’.
Once you have received your initial consultation and decided to go ahead, the equity release company will handle all of the documentation needed for your application.
The equity release process is normally completed within six weeks. This is from receiving all necessary forms and paperwork, to receiving a decision on your application.
During this time, the advisers will review your medical history and lifestyle questionnaire submitted through an online form. They’ll also meet with you in person to go over all aspects of the equity release plan that’s proposed.
With an equity release product , there are no lengthy waiting periods involved with securing money against either property or assets that are held in trust. You can therefore access your funds as soon as you want them which can be very appealing for many people.
It’s also possible to retain ownership of your home or property for as long as you want, even if the amount owed on the credit facility exceeds the value of your equity.
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Consider the different types of equity release options
There are four main types of equity release schemes available to those aged 55 or over, including:
1. Lifetime Mortgage
Repayments on the lifetime mortgage loan are based on a percentage of your income and typically last for the rest of your life, regardless whether you’ve paid off some or all of the capital sum.
2. Reversionary/Home Reversion Plan
A home reversion plan allows you to retain ownership of your property and gives an inheritor (or beneficiaries) time to prepare financially for taking full control
3. Resale/Part-Exchange
As its name suggests, with this type equity release option you’re effectively selling part of your home now in return for a cash lump sum now; however responsibility for future repairs or maintenance is retained by you. If you die, the amount owed on the new loan is deducted from your estate along with any profit gained through the sale of part of your home.
4. Interest Only
This type of equity release option allows you to keep ownership of your property but gives you access to funds for an agreed period so that they can be used for anything you want, such as holidays or home improvements. You don’t have to repay any of the capital sum during this time and neither do you need to plan beyond the end date, which could be just a few years away.
An equity release calculator will help you work out what you could receive from each of the above.
Step 1 – Take equity release advice
It’s important you consider taking independent equity release advice before signing up to any equity release scheme, as this is not regulated by the Financial Conduct Authority.
Specialist, regulated advisers can give you personalised advice and guidance on the options available to you, enabling them to provide tailored recommendations based on your individual circumstances. They can also help explain how releasing equity works and what implications it might have for both yourself and your family should something happen to you.
This will enable you to make an informed decision about whether or not to proceed with a proposed equity release plan.
What do you need from an adviser?
During the initial consultation , advisers will be listening carefully to your requirements and expectations as well as looking for any potential risks that may affect implementation of a proposed plan.
They’ll also ask whether you have any existing assets you could make use of, such as property or land , savings or other investments . In addition they will look at the family dynamics involved too including those living with you now as well as those who may live with you in the future.
An adviser will carry out a detailed review of all sources of income, benefits and capital that are available to both yourself and your spouse/partner if this applies to you.
They will then be able to guide you as to whether a lifetime mortgage or home reversion plan is likely to be the better option for you.
Step 2 – Completing the equity release application form
The first task of the equity release adviser is to complete an application form on your behalf, based on discussions with you.
This will include some basic information about yourself and your property/assets that are held in trust, as well as seeking more detailed information on what type of repayment schedule you’re looking for so they can recommend which plan might best suit your requirements.
"The equity release process is normally completed within six weeks. This is from receiving all necessary forms and paperwork, to receiving a decision on your application."
Once completed, this form must be returned to the lender along with proof of identity documents – typically at least one of a birth certificate or passport – plus medical records if required .
If these are not provided within 28 days then the process cannot proceed any further until they have been received , although it would still be possible to arrange another meeting with an adviser should you wish to discuss things further.
Step 3 – Submitting the application to the lender
The equity release adviser will liaise with your chosen lender to ensure the submitted documentation is correct and complete, before submitting it on your behalf. This might take a few days or a couple of weeks depending on how busy that lender’s advisers are
Once received, the lender then has a further 28 days to decide whether to accept you for its particular plan – although this may be able to be carried out sooner if they have a specific solution in mind for you.
Having decided which equity release plan is most appropriate for you , the next step is providing the relevant information about yourself along with any other documents required by that particular option. You can either do this directly with the equity release provider or via an adviser who will collect the required information on your behalf.
The equity release adviser will contact you to set up an appointment so they can support you through the process of signing the legal documents required to finalise your plan. This may take place in your home or another convenient location , such as a solicitor’s office.
Step 4 – Your property valuation
Following completion of the legal paperwork, your equity release adviser will make arrangements to visit your property with an independent surveyor. Their role is to provide you and the lender with a valuation of your home so they can decide on how much money will be released for you.
In some cases, you may have already undertaken a valuation of your home for another purpose – such as estate planning or HM Revenue & Customs purposes. In this situation, you can ask that same surveyor to carry out the additional valuation required by the lender.
Alternatively, your adviser may be able to arrange a visit from an inspector employed by the Equity Release Council who has been fully trained and accredited to undertake all types of valuations in line with good industry practice.
Step 5 – The formal mortgage offer
Once the lenders have agreed on a valuation of your home , they will then complete and send you the formal mortgage offer. This should arrive within 14 days – assuming everything has been completed correctly up to this point, which is why it’s important for you to provide all relevant information and documentation at the outset .
This document sets out the interest rate and other terms and conditions that will apply to your loan along with details of repayment arrangements , right up until your death or when your plan ends – whichever comes first.
You can still make changes at this point if you wish before accepting their offer, although this would require another visit from an equity release adviser . In addition, be aware that any changes made could affect both the amount of money made available to you and the interest rate charged on your loan .
At this point, you will be given some time to make a final decision on whether to proceed with the equity release loan or withdraw (subject to terms and conditions) . You can either sign the documents yourself – provided you’re legally entitled to do so – or ask an adviser or solicitor to act on your behalf.If you would like more information about how equity release works, ask them for a good-practice guide prepared by Equity Release Council that explains all choices available (for example, lifetime mortgages) .
Step 6 – Equity release solicitor legal advice
A solicitor can advise you about equity release products and help you to set up your plan . If your advisers are unable to do this for you, they may be able to recommend a local firm.
Although many people take out an equity release loan without the assistance of a solicitor, it’s important that any decisions made are based on clear information. This is why it’s recommended you get free legal advice from an accredited adviser or solicitor before making your final decision.
Solicitor referral service
The Equity Release Council has launched its own Professional Solicitors Referral Service which allows consumers direct access to their approved members who provide no-obligation consultations at ‘reasonable’ rates . Visit http://www.equityreleasecouncil.org.uk for more details .
Taking legal advice
Equity release is a relatively new financial product, so it’s important you understand exactly what it involves before accepting the offer from your advisers. Failure to do so could have serious consequences in terms of how much money you can raise and/or interest rates.
In addition, not all products are regulated under equity release rules – although most products available on the market generally provide protection against unfair treatment or hidden costs.
For these reasons , we recommend that anyone considering going down this route should speak with an independent solicitor first, who can explain what this type of plan might mean for them and their family in the future .
If you feel that an equity release solicitor wouldn’t be right for your circumstances, members of the Equity Release Council’s Professional Solicitors Referral Service will offer advice and guidance . This service has been set up by the industry to help consumers find a local solicitor who deals with equity release , which means they will be familiar with the market and best placed to give you sound advice .
Step 7 – Completion and receiving your money
After making your decision, the plan will need to be completed in full . This takes around two weeks but can vary depending on how quickly you gather all necessary paperwork. When this has been received and processed , the money will be released – usually in one lump sum , although it may also be paid monthly over a certain length of time, either by direct debit or cheque.
At this point, you will receive all detailed information about the product you have chosen , including contact details for your financial adviser , who should provide support if any problems arise . You are not obliged to take their advice at this stage, but they may still help with other issues related to receiving your equity release funds.
Requisitions
If your financial adviser receives a requisition, they should inform you as soon as possible . This is usually because another party has made enquiries about the plan or requested that it be stopped altogether .
It’s important to realise that this doesn’t mean the equity release plan is being cancelled – instead , your circumstances could have changed without your knowledge and details will need to be reviewed before your application can go ahead .
This may take up to 28 days , although if there are any areas of concern which need discussing or additional information needs collecting, this might take longer. If this happens, your advisers will keep you informed throughout .
Article author
James Lloyd
I am the primary writer and author for Help and Advice, having originally helped start the site because I recognised that there was a need for easy to read, free and comprehensive information on the web. I have been able to use my background in finance to produce a number of articles for the site, as well as develop the financial fitness assessment tool. This is a tool that provides you with practical advice on improving your personal financial health.
Outside of work I am a keen rugby player and used to play up to a semi-professional level before the years of injury finally took their toll. Now you are more likely to see me in the clubhouse enjoying the game.
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Frequently Asked Questions
How long does it take to release equity?
You can read more here about ‘how long does equity release takes’.
Once you have received your initial consultation and decided to go ahead, the equity release company will handle all of the documentation needed for your application.
The equity release process is normally completed within six weeks. This is from receiving all necessary forms and paperwork, to receiving a decision on your application.
What do you need from an adviser?
During the initial consultation , advisers will be listening carefully to your requirements and expectations as well as looking for any potential risks that may affect implementation of a proposed plan.
They’ll also ask whether you have any existing assets you could make use of, such as property or land , savings or other investments . In addition they will look at the family dynamics involved too including those living with you now as well as those who may live with you in the future.
Submitting the application to the lender
The equity release adviser will liaise with your chosen lender to ensure the submitted documentation is correct and complete, before submitting it on your behalf. This might take a few days or a couple of weeks depending on how busy that lender’s advisers are
Once received, the lender then has a further 28 days to decide whether to accept you for its particular plan – although this may be able to be carried out sooner if they have a specific solution in mind for you.
Your property valuation
Following completion of the legal paperwork, your equity release adviser will make arrangements to visit your property with an independent surveyor. Their role is to provide you and the lender with a valuation of your home so they can decide on how much money will be released for you.
