You might be curious if you can access equity release at 55, how much you could unlock, and what factors you need to take into account.

What is the maximum equity release you can get at age 55?

Two key factors influence the maximum amount of equity you can release:

1. Your Age
2. Your Property Value

The lender calculates the equity you can release as a percentage of your property value, known as Loan to Value (LTV). Generally, the older you are, the more you can release each year, up to the age of 85. Beyond this age, fewer plans are available, and additional funds may not be accessible as you near average life expectancy.

Medically Enhanced Lifetime Mortgages
Some lenders offer medical enhancements, allowing you to access more funds at lower interest rates, as they expect the plan to be shorter-term. These enhancements can be more significant the younger you are and are based on the severity of your medical conditions, increasing incrementally.

It’s important to note that if your property is not of standard construction or has a short lease, the maximum equity release amount may be affected.

What is the best equity release interest rate available at age 55?

At age 55, the best equity release interest rate is currently 5.64%. However, the rate you receive depends on several factors, particularly the amount you choose to release. Generally, the more funds you unlock, the higher the interest rate will be.

Unlike many other financial products, equity release interest rates are fixed for life. This means your rate won’t change in the future, offering stability and protection against unexpected increases.

What to consider when taking equity release at age 55.

At age 55, you become eligible for equity release, with lifetime mortgages being the most common option. These plans are designed to last for the rest of your life, as the name implies.

Given your age, the plan is likely to span several decades. Lenders typically base their estimates on life expectancy data from the Office for National Statistics (ONS), with an illustrative term of around 29 years for someone aged 55.

It’s important to note that while there is an estimated term, the plan continues for as long as needed, usually until the last borrower passes away or moves into long-term care.

You won’t be required to make monthly payments during this period, and most people choose not to. However, it’s essential to consider how the interest will accumulate over time and the potential effect this could have on the value of your estate.

How equity release changes as you age.

As you grow older, the amount you can access through equity release typically increases. Each year, the percentage of your property value you can release (LTV) generally rises by 1%.

There is one key exception: at age 60, the LTV often increases by up to 3%. This is because some equity release lenders only begin offering plans at age 60, even though options are available from age 55.

When discussing equity release with your advisor, it’s important to weigh whether you need the funds immediately or if it might be better to wait for a potentially larger release amount.

What is the best equity release lender for a 55-year-old?

There isn’t a single “best” equity release lender for a 55-year-old, as the right choice depends on your individual financial situation and objectives.

However, some lenders currently offering competitive interest rates and release amounts include:

– Standard Life
– More2Life
– Canada Life
– Aviva
– Just Retirement
– Legal & General

This list is not exhaustive, as other lenders may also offer excellent plans. Your equity release adviser can recommend the most suitable lender based on your specific financial goals and needs.

What is the best equity release plan for a 55-year-old?

There isn’t a single “best” equity release plan for a 55-year-old, as the ideal plan is tailored to your individual needs.

Your equity release adviser will conduct an information-gathering process called a “Fact Find.” This involves assessing your assets, liabilities, income, future plans, and financial goals.

Only after completing this detailed analysis can they recommend the most appropriate and cost-effective plan for your circumstances.

Can you get equity release if one applicant is under 55?

To qualify for equity release, all applicants must be at least 55 years old. If one co-owner is under 55, equity release is only possible if the application is made in the sole name of the person over 55, but this comes with additional risks.

The person applying for equity release must fully own the property. If you currently co-own the home, the person under 55 would need to transfer their ownership as part of the process. However, this means they would no longer have any legal claim to the property.

If the sole applicant passes away or moves into long-term care, the equity release plan will end, and the lender will need to be repaid. This could result in the remaining person needing to either repay the loan or move out.

Most lenders will allow a sole applicant unless you are married or in a civil partnership, in which case only two lenders offer this option, limiting your choices.

Your equity release adviser can guide you through the process and explain how applying as a sole applicant might affect both of you.

Why could equity release be a bad idea at age 55?

Equity release at age 55 may not be the best option if you’re concerned about the amount you’ll leave to your beneficiaries. Since these plans are designed to last for many years, the interest can accumulate significantly over time, especially if you don’t pay off any of the interest during the plan.

If you do plan to service the interest, a standard residential mortgage could be a better option. Residential mortgage interest rates are often lower than equity release rates, but they aren’t fixed for life like equity release plans. This means you could face rate increases in the future. Residential mortgages also require monthly payments, and you’ll need to prove you can afford them.

In contrast, equity release plans do not assess affordability. Instead, the amount you can borrow is based on your age and property value.

Pros of Equity Release:
✅ No mandatory monthly payments:
Payments are optional, so there’s no risk of repossession if you don’t pay.
✅ Poor credit scores accepted:
You can qualify for equity release even if you have bad credit or no income, as affordability isn’t assessed.
✅ No fixed term:
The plan runs for as long as you live in the property, with repayment required only when you pass away or move into long-term care.
✅ Drawdown options:
You can access funds from a pre-agreed reserve facility as needed.
✅ Fixed-for-life interest rate:
The interest rate remains the same for the life of the plan, protecting you from rate increases.
✅ Medically enhanced plans:
Certain medical conditions may qualify you for more funds and lower interest rates.

Pros of Residential Mortgages:
✅ Shorter Early Repayment Charges (ERCs):
ERCs typically last only as long as the fixed-rate period, while lifetime mortgages may have ERCs lasting 4 to 15 years.
✅ Higher Loan-to-Value (LTV) ratios:
Residential mortgages may offer higher LTVs (up to 95%), allowing you to borrow more while you’re younger and still working.
✅ Lower interest rates:
Short-term fixed-rate mortgages usually come with lower rates compared to fixed-for-life equity release plans.

Cons of Equity Release:
❌ Compounding interest:
If you don’t make monthly payments, the interest accumulates, leading to a larger total loan over time.
❌ Longer Early Repayment Charges:
Since the interest is fixed for life, ERC periods can be longer than with residential mortgages.
❌ Stricter property underwriting:
Equity release lenders focus heavily on the resale value of your home, resulting in stricter property criteria.
❌ Primary residence only:
Equity release plans are currently only available for primary homes, not second properties or buy-to-lets.

Cons of Residential Mortgages:
❌ Interest rate shocks:
When your fixed-rate term ends, you’ll revert to a Standard Variable Rate, which could lead to significant increases in monthly payments.
❌ Mandatory monthly payments:
You must make fixed monthly payments that cover both interest and capital.
❌ Risk of repossession:
If you can’t keep up with monthly payments, your home could be repossessed.

Are You Taking Equity Release Too Soon?
Taking equity release at age 55 may limit your options in the future. As the national retirement age approaches, it’s worth considering whether you truly need the funds now or if it would be better to wait until you need the money more urgently later in life.

A Money Release advisor will only recommend an equity release plan if it’s truly in your best interest based on your circumstances.