BALANCED ADVICE
Alternatives to Equity Release
Equity release is one way to use the value in your home. It is not the only one, and for some homeowners it is not the best one. Before we recommend a lifetime mortgage, we check the alternatives on this page against your circumstances. Three recent case studies below ended with us recommending something else.
Proud Member of the Equity Release Council
As members, every lifetime mortgage plan we recommend includes the No Negative Equity Guarantee and the Right to Remain in your home for life. Both protections are built into every ERC-approved plan as part of the Council's Code of Conduct.
A lifetime mortgage has no required monthly payments. That makes it the option for homeowners who want to stay in their home and cannot support monthly payments from income, and who have no other assets to draw on. Because no monthly payments are made, your income is not assessed and lenders tend to be more flexible on credit history.
The reason to compare first is that this is only true for some people. Our later life options page explains lifetime mortgages, drawdown and interest-serviced plans, and is equity release right for you? and safeguards and risks cover the protections and downsides in full.
We are independent and whole of market. Before recommending anything we check which standard mortgages, RIOs and lifetime mortgages you qualify for and what each would cost, and we look at the non-borrowing options above alongside them. We then tell you which fits, including when that is not a product we arrange.
Meet at our Chorley office, at your home, or by video call.
Why we check the alternatives first
Advice is compulsory for equity release, and the rules say what that advice has to cover. The FCA's rules for equity release advice (MCOB 8) list your entitlement to means-tested benefits, your tax position and alternative ways of raising the money, including local authority grants, among the things an adviser has to consider.
The Equity Release Council's adviser checklist, which every adviser member has to complete, goes further. It covers a full discussion of alternatives such as trading down, grants, savings and pension income and financial help from family, both now and in the future. It also covers the effect on your benefits and your estate, and advising you to speak to your family.
We do that before we recommend anything. In some cases the answer is equity release. In the three case studies below it was not.
The alternatives to equity release
Each option below has conditions. None of them suits everyone, and neither does equity release.
Retirement interest-only mortgage (RIO)
A RIO works like a standard interest-only mortgage with one difference: there is no end date. You pay the interest each month, so the amount you owe does not grow. The loan is repaid when the home is sold, or when you die or move into long-term care. On a joint RIO that applies to the last remaining borrower.
The lender has to be satisfied the payments are affordable from your retirement income, and the home is at risk if the payments are not kept up. A lifetime mortgage has no required monthly payments, but any unpaid interest is added to the loan and compounds, so the balance grows.
A RIO is a residential mortgage, not a type of equity release.
Traditional (repayment) mortgage
You do not become ineligible for a standard mortgage at a set age. Lenders set their own maximum age for the end of the term and assess whether your income will cover the payments for the whole of it. If you are still working, or have retirement income the lender accepts, a repayment mortgage clears the balance by a set date. A lifetime mortgage is not designed to do that.
The payments are higher than interest-only because they include capital, they have to be made every month for the full term, and the home is at risk if they are not.
Downsizing
Selling and buying somewhere smaller or cheaper releases money without borrowing, so there is no interest and no loan secured on your home. It can also mean a home that is easier to maintain, closer to family, or in a cheaper part of the country.
It has one-off costs: estate agent and legal fees, removals and stamp duty where it applies. It means leaving your home, and it depends on a suitable property being available where you want to live.
Help from your family
Some families lend or give money so that a formal product is not needed. If a family member lends money expecting it back, set the terms out in writing. If it is a gift, get advice on the inheritance tax position first.
Family also matters whichever route you take. The Equity Release Council's checklist has advisers recommend that you speak to your family and anyone else who stands to inherit. In Wendy and John's case, the conversation with their family is where the size and upkeep of the house came up, and that changed the plan. We welcome family at the meeting, whether in person, at your home or by video.
Our guide to equity release and inheritance covers what a lifetime mortgage does to the estate.
Council grants for home adaptations
If the reason for borrowing is adapting your home, you may not need to borrow. A Disabled Facilities Grant can pay towards changes such as ramps, a stairlift or a level-access shower. In England the maximum is £30,000. It is means-tested on household income and on savings over £6,000, and it does not affect any benefits you get. You apply through your local council, which assesses what changes you need.
Check this before you commit to any borrowing. See GOV.UK: Disabled Facilities Grants.
Savings, investments and pension income
Drawing on savings or investments carries no interest and does not reduce your estate beyond the amount you take. The questions are how much you have, how long it has to last and what happens if it runs out sooner than expected. If you have a pension you have not fully taken, how and when to take it is a decision for a pension adviser. We can work alongside your adviser.
Debt advice
If the money is needed to clear debts, free debt advice is available from StepChange and MoneyHelper. We are not debt advisers, and a lifetime mortgage is not the only way to deal with debt.
Three cases where equity release was not the answer
Equity Release - When a Retirement Interest-Only Mortgage Was the Better Fit
Equity release fell £39,000 short for Monica, 73. Why a RIO mortgage repaid her loan instead.
Equity Release - When a Repayment Mortgage to Age 75 Was the Better Fit
Stuart, 61, thought equity release was his only option. He got a repayment mortgage to age 75.
Equity Release - When Downsizing Was the Better Fit
Equity release would have raised £198,000 for Wendy and John. They chose to downsize instead.
Frequently asked questions
Is equity release the only way to release money from my home?
No. You can sell and buy somewhere cheaper, borrow with a retirement interest-only mortgage or a standard mortgage, use savings or pension income, get help from family, claim a grant or benefits you are entitled to, rent a room or keep working. Which of these is available depends on your age, income, property and what the money is for.
Is a retirement interest-only mortgage a type of equity release?
No. A RIO is a residential mortgage. You pay the interest every month and the amount you owe does not grow. Equity release usually means a lifetime mortgage, where monthly payments are optional and any unpaid interest is added to the loan.
Am I too old for a standard mortgage?
Not on age alone. Lenders set their own maximum age for the end of the term and assess whether your income will cover the payments for the whole of it.
Can I get a grant to adapt my home instead of borrowing?
Possibly. A Disabled Facilities Grant of up to £30,000 is available in England for essential adaptations, subject to a means test on household income and on savings over £6,000. Apply through your local council.
Could equity release affect my benefits?
It can. The money you release may be treated as capital or income and reduce means-tested benefits such as Pension Credit, Council Tax Support or Universal Credit. We review your benefits position before advising.
Should I involve my family in the decision?
It is your decision. The Equity Release Council's checklist has advisers recommend that you speak to your family and anyone who stands to inherit, and in one of our case studies that conversation changed the outcome.
Can I still take equity release after downsizing?
A lifetime mortgage can be taken on a home that meets the lender's criteria. The amount available depends on the age of the youngest borrower and the value of the property.
Will you always recommend equity release?
No. In three recent case studies we recommended a RIO, a repayment mortgage and downsizing. We recommend equity release where, after comparing the alternatives, it is the best fit.
Why Choose Aspect Mortgages?
Independent and FCA regulated. We work for you, not for the lender
Proud member of the Equity Release Council, giving you the No Negative Equity Guarantee and the right to remain in your home for life
Whole of market access. We search all leading equity release lenders to find the right plan for you
Family run since 2004 with over 100 years of combined team experience
No pressure, no rush. Complex decisions explained clearly, at a pace that suits you
Family involvement welcome. We actively encourage family members to be part of the conversation
Rated 5 stars across 500+ Google reviews. One of the most reviewed brokers in the North West
Fixed, transparent fee. £1,495, payable only on completion. Nothing upfront, can be paid out of the funds released.
What our customers say
Rated 5 stars across 500+ Google reviews, one of the most reviewed mortgage brokers in the North West.
Find out what equity release could do for you.
We can meet at our Chorley office, at your home, or by video call, whichever suits you best. Call us on 01257 812345 or drop us a message and we'll get back to you.
Areas We Cover
Remote advice offered nationwide.
There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be £495 for a residential/buy to let mortgage or £1,495 for an equity release/retirement mortgage.
Aspect Mortgages Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/s/) under FCA reference 305352. The FCA do not regulate Business Buy to Let Mortgages.
As independent advisers we have access to the whole market, except for deals that you can only obtain by going direct to a lender. Registered in England and Wales No: 05103801. 16 St Thomas' Road, Chorley, PR7 1HR.
A Lifetime Mortgage may reduce the value of your estate and could affect your entitlement to benefits. To understand the features and risks please ask us for a personalised illustration.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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