How Long Does Equity Release Take? Quick Answer
For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.
How long does equity release take? If you’ve decided to go ahead with an equity release plan, you’re probably eagerly anticipating your cash lump sum or drawdown to start making home improvements or to plan your next getaway.
We explain the different equity release schemes and how long the average equity release process will take in the UK.
What is equity release?
Senior homeowners can access some of the equity in their property with an equity release scheme. It allows you to take a lump sum amount or unlock a drawdown facility without needing to make monthly repayments. The most common reasons to use an equity release plan is to make retirement comfortable, pay for in-house care or to tick off items on your bucket list.
Instead of repaying the money each month, it is repaid when you sell your home from the sale proceeds. You can never be forced to sell your home to repay the debt unless you move into long-term care. If you don’t need to move into a care home, the debt will be repaid after you die from the sale of the home.
Only ever consider equity release from a lender that is authorised and regulated by the Financial Conduct Authority, and preferably one that is a member of the Equity Release Council.
FREE Credit Report FOR LIFE!
I’ve snagged a deal for you..
Spot errors that could be ruining your credit report
Simple actions to improve your credit score
Better score, better deals
Equity release eligibility criteria
To be eligible for equity release, you must usually own your home with no existing mortgage and it must be valued at £75,000 at least. You’ll also need to meet a minimum age requirement that could be set anywhere between 55 and 65. If you are joint homeowners, the youngest person must meet the age requirement to qualify.
How long does equity release take? (The quick answer)
From the start of the equity release application process to the money landing in your bank account on the completion date, you should expect the whole process to take between 6 and 8 weeks. If there are complications within your application or you live at a unique property, this process can take much longer.
We go into further detail on this question later in our guide!
How does equity release really work?
Equity release works in one of two ways. It can either be done through a lifetime mortgage or through a home reversion plan. We explain how both of these work in detail below.
- Lifetime mortgages
A lifetime mortgage is the most used method of equity release. You release a percentage of your home equity as a loan and a fixed interest rate is charged on this amount. For example, if you have a £250,000 home you may release 50% equity (£125,000) and agree to pay 6% interest on this amount.
However, as this is an equity release scheme, no loan repayments are due at all. The interest owed builds up and gets added to the total debt over time. If you wish, you can usually make voluntary interest payments to keep the total debt down, but it is not necessary if you don’t want to.
Having a lifetime mortgage for over a decade or two can easily double the amount you owe when the property is eventually sold. So, you may get in a situation where the debt owed is greater than the property value. The good news is you won’t have to pay anything more than the price that the home sells for as long as the equity release provider is a member of the Equity Release Council.
As part of the lender’s ERC membership, they must commit to the negative equity guarantee that ensures seniors never have to pay back more than their home’s selling value when they have a lifetime mortgage. But it could still mean giving all the sale proceeds to the lender when it is sold.
What is an enhanced lifetime mortgage?
An enhanced lifetime mortgage could benefit people with poor health and reduced life expectancy. The application process involves a health and lifestyle questionnaire and possibly the supply of medical records. If you are deemed to have a reduced life expectancy, you could release more equity than through a standard lifetime mortgage deal.
- Home reversion schemes
Home reversion schemes are less common than using a lifetime mortgage, but some seniors prefer them. The lender gives you money in return for a percentage of your home’s future sale value and doesn’t usually charge any interest. The catch is that the money loaned is significantly below the value of the percentage of the sale proceeds you need to give up when the property is sold.
For example, you might receive a loan equal to 30% of your home equity, but then need to pay the company 60% of the money from the sale.
The pros of releasing equity
The benefits of equity release are:
- Tax-free cash paid as a lump sum or as a drawdown
- Never being forced to make repayments until you sell
- Never being forced to sell your home
- Option to reduce the debt with voluntary payments
- Never having to pay back more than your home’s sale proceeds (when covered by the negative equity guarantee)
- You are allowed to move to a suitable alternative property and take the mortgage with you
What is the catch with equity release?
It is generally believed that the catch with equity release is the amount you have to pay back from the house sale is extremely high compared to the amount you receive. This is true, but it is done to protect the lender from declining property prices while also trying to make a profit.
The real catch is not getting adequate financial advice from the right people. You can’t rely on online guides alone or an equity release calculator to make your decision.
What is the process for releasing equity?
The process for releasing equity is broken down into six stages, namely:
- The homeowner gets equity release advice, and if they wish to proceed, submits their application with an appropriate lender.
- Your property is valued
- You receive a formal lifetime mortgage offer
- Further financial advice and legal advice is taken
- Completion date
Essential equity release advice
Before you make a decision and try to sign up for an equity release plan, it’s essential that you receive independent financial advice and possibly even legal advice. Members of the EHC must insist that you get advice before agreeing to one of their plans.
Only use an equity release adviser that is not connected to the companies you are considering to use, and ensure they are authorised and regulated by the Financial Conduct Authority (FCA). All legal financial advice services in the UK must conform to the FCA rules.
How long does equity release advice take?
The process of sourcing, securing and receiving equity release advice can take longer than you expect. Financial advice services usually have a small waiting list, so it could take a week or two to get an appointment. And it could take some days before to settle on the financial adviser you wish to use.
To be safe, you may want to earmark three initial weeks to get advice and then use the advice to make your decision.
How long does it take to find an equity release company?
It only takes a couple of internet searches to find equity release companies offering plans. But it takes much longer to uncover the best deals and decide on who you want to go with. The equity release advice you receive usually includes a service to help look for suitable providers and make your application.
How long does an equity release application take?
Once you have settled on an equity release provider, you will need to complete its equity release application form. It will require you to enter lots of personal data and information about your property. If you already have this information to hand, the form can take an hour or two. But you may need some time to dig out title deeds and related documentation.
How does a property valuation work?
Getting an accurate and up-to-date value of your property is essential for the lender to assess your property and make a mortgage offer. This will include a surveyor going to visit your property in person and coming up with a market value. They’ll simultaneously inspect the property to ensure it conforms to regulations and ensure it is well maintained.
The visit of the surveyor takes just 30 minutes to an hour. They then need to write a report and submit it to the equity release company, which takes a couple of days on average. This report goes to the mortgage company’s underwriters for review. If they are happy to proceed, your offer should be available within 3-5 days.
Further legal advice
Once the offer is made available, it will be sent to your solicitor to analyse the offer and provide you with further advice. In normal situations, this part of the process is smooth and no requisitions (clarification or amendments) are required. If your solicitor wants to query part of the mortgage offer, it can add another week to the process. If not, a completion date will be set.
What can slow down an equity release application?
Equity release applications can also be slowed down for the following reasons:
- Short lease extensions – if the leasehold is too short, the company may require you to get it extended before returning to the application. This can cause serious long delays.
- Deceased owners still named on the title deeds – taking off deceased people from title deeds is rarely thought about, but it can slow down the formalities of an application.
- Having to supply medical records – if you have chosen an enhanced equity release plan, accessing medical records to be supplied can take time.
This is not an exhaustive list and there may be other reasons why your equity release process takes longer.
What can speed up an equity release application?
One way of ensuring a swifter process is by choosing financial advice from firms that specialise in equity release, rather than firms that have helped with these mortgages only a handful of times. You should also have documentation ready and discuss any tight deadlines with your adviser. If you are in a hurry for a particular reason, you may be able to pay for the adviser and law firm to prioritise your application.
How long does equity release take (UK)?
Based on the information above, you can expect each of the six stages within the process to take one week on average. Some may be quick to execute, but to get them moving through the process and through queues can take longer.
In total then, the smoothest applications take around six weeks, while those with a couple of issues can take up to eight weeks. Anything longer signifies a busy period or a greater issue with the application.
What is the quickest time for equity release to be completed?
The quickest time for equity release to be completed would be just under six weeks. Although six to eight weeks is the average, most applications cannot be processed at a much quicker rate than the bottom end of this average estimate.
Can I be refused equity release?
You can be refused equity release schemes. The most common reason for being refused is that the property is not deemed in a good state or does not conform to building regulations.
The surveyor who comes to value your property as part of the equity release process will be assessing your home in a number of ways, including calculating how much of your property’s roof is flat.
Can I release equity with a small mortgage remaining?
Some lenders may still provide a lifetime mortgage if you have a very small mortgage. But they will expect that some of the money you receive will be used to pay off the first charge mortgage as part of the deal.
Can I release equity with bad credit history?
If you have a bad credit history then this should not jeopardize your chances of getting approved for equity release. The lender is not interested in your finances or credit score because you are not being asked to make regular repayments. They’re interested in the condition of your property and its value.
However, if a charging order has been applied to the property as part of your debts, this will cause an issue.
How long does it take to get equity release? – a quick recap
On average, equity release will take between six to eight weeks if you have no or very few application issues. If you have issues relating to title deeds or sourcing documentation, the process can take a lot longer. One of the worst issues to face would be having too short of a leasehold on your property, which could put the application on hold for many weeks if not months.
Want to know more about equity release?
If you need to know more about equity release you’ll find over 100 related articles and guides here at MoneyNerd. We’ve answered questions on topics to do with equity release and tax, state benefits, leasehold flats and much more.
Type your equity release question into our search bar and you’ll probably find a complete guide desiccated to answering it in detail.