Can You Get Equity Release on a Retirement Flat?

MoneyNerd introduces enquiries to Age Partnership and may receive a referral fee. MoneyNerd does not provide equity release advice. Equity release reduces the value of your estate and can affect means-tested benefits. With a lifetime mortgage, unpaid interest compounds and increases the amount owed. Fees and early repayment charges may apply.

Ask a regulated adviser to explain suitability, costs and alternatives. For free, impartial guidance, visit MoneyHelper.

Are you keen to learn about equity release on a retirement flat? In the UK, it’s possible to do this, but there are some things you need to know.

In this article, we'll cover:

What equity release is and how it works.
The difference between leasehold, freehold, and commonhold.
The conditions needed to get equity release on a retirement flat.
The number of years left on your lease that you need for equity release.
What you can do if your lease is too short for equity release.

We know that equity release can seem tricky, but don’t worry; we’re here to make it clear for you. We have lots of useful tips to help you understand the process.

Let’s dive in.

How does it work?

Does equity release with no monthly repayments sound too good to be true? We often get this question from people, so we’d like to provide a clear answer once and for all.

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 lifetime mortgage, repayment is normally triggered when the last borrower:

Passes away
Moves into long-term care

Other repayment triggers can arise under the contract. Repayment may be made from other funds, so sale and loss of the entire inheritance are not automatic.

The most common method of equity release is a lifetime mortgage, but there are some variations, such as an enhanced lifetime mortgage and an interest-only lifetime mortgage.

» TAKE ACTION NOW: Find out how much equity you could release

Can you take it out on age-restricted properties?

Retirement flats and age-restricted properties can be difficult to place. Availability depends on the particular lease, resale restrictions, services and current lender criteria; ask a specialist adviser. See related guidance, related guidance.

One of the reasons that lenders won’t often provide equity release on retirement properties is that these properties are more difficult to sell on the open market, which could make recovering the debt with an eventual sale more troublesome. In a nutshell, the lender faces greater risk when dealing with retirement flats.

Retirement flats aren’t the only type of property that can be difficult to secure an equity release plan. You might also run into trouble when trying to take out a lifetime mortgage on leasehold and commonhold properties.

Consider the costs and risks of equity release

Equity release is a long-term financial decision. A lifetime mortgage is a loan secured against your home. If interest is added to the loan, the debt can grow substantially and reduce the inheritance you leave.

Consider the fees, effect on means-tested benefits, early repayment charges and future care needs. Alternatives may include downsizing, using other assets or a retirement interest-only mortgage where affordable.

Use the button below to start an enquiry with Age Partnership. An estimate does not confirm eligibility or suitability. Get specialist financial and independent legal advice before proceeding.

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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.

Can you get it on a leasehold flat or house?

Yes, you can take out an equity release plan on a leasehold property but the equity release company will make its decision based on the number of years left on the lease and some other factors.

You might have to extend your lease before you’re able to take out an equity release plan on the leasehold property.

How many years do you need left on your lease?

Minimum remaining lease terms vary by lender and may depend on age. Check the specific product rather than relying on a universal 75-,90- or 120-year rule.

An Age Partnership customer’s experience

Individual experiences vary. Equity release is a long-term decision, and specialist advice is needed to assess whether it is suitable for you. Compare the costs, risks and alternatives before proceeding.

“I am more than pleased to have taken out Equity Release with Age Partnership.”

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What happens if your lease is too short?

If the equity release company states that your current lease is too short to be approved for a lifetime mortgage, they will reject the application.

You could consider extending your lease before making an equity release application, but there will be costs involved.

Can you use it to extend your lease?

Yes, it’s possible to use some of the money from your equity release plan to extend the lease. For example, some lenders will approve the lifetime mortgage on the condition that some of the funds directly go towards extending the lease.

This would allow you to take out an equity release plan on a leasehold property when the property is deemed to have too short of a remaining lease. It can be a solution when you cannot afford to extend the lease without receiving the equity release loan first.

Doing this may also extend the equity release timescale.