Can You Get Equity Release on a Flat? – All You Need to Know

Are you curious to find out if you can get equity release on a flat in the UK? If so, you're in the right place. This guide will provide clear and simple answers to your questions.

In this guide, we’ll cover:

• How you can take equity out of your flat.
• The difference between a freehold and leasehold property.
• The ways to get a realistic quote for equity release.
• Who can qualify for equity release on a flat.
• The possible reasons for being refused equity release.

We know that the topic of equity release can seem hard to understand, but there’s no need to worry. Our aim is to give you helpful advice to make things easier. We understand the concerns you might have, and we’re here to provide the facts. By the end of this guide, you’ll have a better grasp of how equity release on a flat works.

Let’s get started.

Can I take equity out of my property?

There are many ways to take equity out of your property. You may be able to do this with home equity loans and second charge mortgages, or older people can choose equity release schemes, including a lifetime mortgage. 

The two types of equity release

There are two main ways of releasing equity in the UK, known as lifetime mortgages and home reversion schemes. 

A lifetime mortgage is a loan secured on your home; you retain ownership. Interest that is not paid is added to the balance. The loan is usually settled when the last borrower dies or moves permanently into care, subject to the contract. Required or optional repayments vary by product. For a plan meeting the relevant Equity Release Council standards, the right to remain depends on keeping the property as your main residence and meeting the contract terms. A no-negative-equity guarantee limits repayment to the net sale proceeds when its conditions are met; it does not stop the balance growing or make the product risk-free.

A home reversion plan is a sale of part or all of your home, usually below open-market value, in return for money and the right to remain under the plan’s occupancy terms. It is not a loan. The provider receives its agreed share when the home is sold.

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Equity release enquiry: Continue to the equity release enquiry

Advertisement. In partnership with Age Partnership, which advises on lifetime mortgages. MoneyNerd introduces enquiries and may receive a referral fee. Equity release can reduce your estate and affect means-tested benefits and future care funding. Fees may apply and interest added to a lifetime mortgage increases the amount owed. Specialist financial and independent legal advice are required before proceeding.

Is releasing equity possible on flats?

Most equity release applications are to release equity on houses, so is it possible to release equity on a flat in the UK? 

The simple answer to this question is yes. You can release equity on a flat. It gets a little trickier depending on if it is a freehold flat or a leasehold flat. We discuss these scenarios below. You should always seek financial advice before making a decision. 

Can I do it if I own a freehold flat?

Freehold flats and flats with a share of freehold can have different legal structures. Acceptance is lender-specific and may depend on a suitable lease, repair arrangements and enforceable rights. A solicitor and adviser must check the actual title.

How about equity on a leasehold flat?

It’s also possible to get an equity release scheme on some leasehold flats with some equity release lenders. The lender will consider how long you have left on your current lease before making a decision. They will also consider any ground rent charges and other clauses applicable when the property is to be sold on. 

What if my lease length is too short?

Minimum remaining lease requirements vary by lender and can depend on the youngest borrower’s age. A lease extension may be needed and must be costed and agreed before proceeding.

Can you be refused equity release?

As mentioned above, your equity release application can be refused on some leasehold properties if the length of your lease is too short. Any lease below 100 years is at greater risk of being a problem for equity release companies. 

But this isn’t the only reason you can be refused equity release. 

Companies can also reject your equity release applications for:

1. Having a flat roof
2. Being located in a flood risk area
3. Non-standard construction
4. The presence of asbestos
5. Or even close proximity to commercial buildings 

Poor credit does not automatically rule out every lifetime mortgage, but lenders set credit criteria and may require some debts to be repaid. An IVA, bankruptcy, judgment or other credit issue can restrict eligibility; acceptance is not guaranteed.

Things to consider

Equity release includes lifetime mortgages and home reversion plans. A lifetime mortgage is a loan secured on your home; a home reversion plan sells part or all of the property. Equity release reduces what may be left in your estate and can affect means-tested benefits and future care funding. A lifetime mortgage is usually repaid when the last borrower dies or moves permanently into care, subject to the plan terms. Specialist financial and independent legal advice are needed. Any existing mortgage must normally be repaid from the proceeds or other funds. Age Partnership publishes an advice fee of £1,995 payable on completion; confirm the current fee in your personalised illustration. Lender and legal fees may also apply.