How does owning a second home affect your equity release application? Mark Gregory helps a couple who would like to access funds so they can keep their second home in the family
Question
Please, can you confirm whether I am suitable for the release of shares? I own a property in Derbyshire worth around £350,000 and live with my wife who is the same age as me – 74.
We own another property, a buy-to-let property, which we are giving to our son and daughter-in-law to live in. Because of this, we no longer have rental income, so we are looking at equity release.
Are we eligible for equity release given the fact that we own another property? We are both retired, although my wife is a part-time teacher. Thank you for your advice.
Mark’s answer
Thank you for your question. Based on what you’ve shared, yes, it probably is Eligible for stock releaseeven though you own (or have owned) a second property.
Equity release is usually assessed against the property where you live as your main residence, and owning another property does not automatically prevent an application.
However, since you are proposing to allow your son and daughter-in-law to live in the rental property and will no longer receive rental income, it makes sense to review the matter All lending options laterAnd not just release stocks.
Your main options
1) Retirement Interest Only (RIO) Mortgage.
A RIO can be right for some borrowers because it works more like a traditional mortgage: you borrow a lump sum and earn Contractual monthly interest paymentswhile keeping the capital balance generally the same. Lenders will evaluate affordability based on your retirement income (and your spouse’s part-time income can help).
2) Flexible Lifetime Mortgage (Equity Version)
Given your low household income, a Flexible Lifetime Mortgage It may be of particular interest because there is There is no contractual requirement To make monthly payments.
The basic requirements for a flexible lifetime mortgage are usually the following:
- Minimum age: 55
- Minimum property value: £70,000
- Residing in the United Kingdom
- You must own your home (usually mortgage-free, although your existing mortgage can be replaced during the application)
Depending on your goal, a flexible lifetime mortgage can allow you to:
- Receive an initial tax-free lump sum, and
- Keep additional funds available through cash reserve/Towing facility To supplement income later if necessary
A major advantage of cashing out is that you only pay interest on the money you actually release – not on the money held in reserve.
You can also choose whether or not to make payments:
- No payments,
- Partial paymentsor
- Interest payments in full (often referred to as Interest service) – at your discretion.
Key Features (Typical)
- A tax-free lump sum (often starting from £10,000)
- Fixed interest rate for life
- Reserve/cash withdrawal facilities
- Flexible and voluntary payments (if you choose)
Your next step
Since you own two properties and your income profile is changing, the next best step is Compare the entire market Between an RIO and a lifetime mortgage, including how each affects long-term affordability and real estate.
Our independent advisors can provide clear numbers and options without any obligation. Calls 0800 802 1051 Or find Local equity issuance advisor here.
Our advice fees are £1,495and is only paid if the recommended plan is completed and you are completely happy.
Meet our expert…
Mark Gregory, Founder and CEO Supermarket stock issuehere to answer your questions. Mark is himself a consultant with over 20 years of equity issuance experience.
He launched Equity Release Supermarket 10 years ago and has developed into one of the UK’s leading equity release specialists.
Email kate.saines@emap.com to ask a question
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