Steps you need to release capital
Releasing equity can seem like a complex process and at London City Mortgages (LCM) we have a powerful calculator to help you with the figures.
You have probably considered other alternative ways of raising extra money
already and the equity release calculator can show you the important figures you need to compare the lifetime mortgage.
Step 1 - Free equity release calculator
You can use our free equity release calculator to see how much you can release based on the youngest age of either you or your partner. Providers apply a maximum loan to value based on age
and the calculator will show you the amount.
Find out what cash you can release from your property and maximum loan to values from providers at this link:
Equity release calculator showing instant results for your property
The calculator gives you a list of the leading providers and most competitive rates if you take 20% of the property value as a lifetime mortgage.
There are many useful features of the calculator. Start by entering the lump sum cash upfront
, change the mortgage interest rate, make overpayments to keep the costs down and enter a percentage rise for your property value which can offset the roll-up mortgage.
The calculator shows in figures and useful charts how the lifetime mortgage and property value rise over time as well as how much equity is available for your family.
Step 2 - Free equity release quote
You can use our free equity release quote for a detailed report of the leading providers based on your property and circumstances. We approach the whole market and have exclusive deals offering preferential rates to our clients.
Find out about exclusive provider deals when repaying your mortgage or taking tax free cash from your property at this link:
Equity release quote with the best provider products and rates
We can produce quotes if you want to take a lump sums or drawdown or both and take account of your needs such as making overpayments or paying the mortgage back early.
Our experts offer impartial advice for lifetime mortgages or retirement interest only mortgages (RIO) and you can speak to us on the phone if you have a specific purpose in mind.
You may have more complicated needs such as repaying an interest only mortgage
and taking cash, buying a more expensive home or even downsizing using equity release and we can advise on these approaches.
Step 3 - Talking to your family
Before taking out an equity release you may like to include your family members as roll-up interest would reduce the equity available when the lifetime mortgage is repaid.
This is certainly the case if you are taking the maximum cash release where fixed interest rates are 6.0% pa or more. By selecting a smaller loan to value of 20%-30% you can reduce the cost of equity release
as the rates could be as low as 2.5% pa and equity erosion is significantly reduced.
By including family members, they can be aware of how the mortgage will increase and may be willing to pay a monthly amount which would reduce the impact of roll-up interest leaving equity for beneficiaries
in the future.
Step 4 - Specialist legal advice
Before completing the lifetime mortgage it is important you obtain legal advice this loan is secured on your property. If this is a joint application, each party should appoint their own solicitor that is independent and acts solely for you.
The solicitor should be a specialist in equity release and if you are relocating and buying a new property
, they should be experts at conveyancing allowing you to buy and sell using a lifetime mortgage to finance the move. This would also apply id you were downsizing and transferring to a new property.
We can recommend solicitors we already work with and can arrange the service on a local basis either remotely or in a meeting to ensure you are happy with the mortgage agreement to release equity.
Step 5 - Application through LCM
Our LCM advisers are equity release experts and can approach the whole market to select the provider and product that best meets your requirements including considering retirement interest only mortgages, home reversion plans and lifetime mortgages.
We take account of your needs and objectives whether this is to repay your existing mortgage, downsizing and releasing cash, buying your dream home at retirement
or releasing cash for improvement your quality of life or gift to family and friends. We can advise you on the most suitable products with the lowest interest rate whether this is a lump sum or drawdown reserve for the future.
Once we establish the most suitable provider, lowest fixed interest rate
and if you intend to pay a proportion of the interest each month or roll-up the interest, we can arrange the application on your behalf and handle the paperwork for you.
Step 6 - Provider valuation & offer
In most cases the provider includes a free valuation from a third-party valuer. We would need to check your property is acceptable for equity release
and ideally your home is well presented, in good condition, of standard construction and in a residential area to avoid any problems with the valuation.
A valuation from an estate agent may be different from that of the provider’s valuer as with equity release the property is not being sold to a buyer now. Therefore, the valuer’s comments are important and may include other factors such as the ability for the property to be sold in future and opinion of the local area.
The provider will send you the offer confirming the amount for equity release. If this is less than expected you may have to adjust your plans if you cannot release as much cash as you expected.
If you now cannot repay an existing mortgage you may need to downsize your home and release cash
and equity release can help you achieve this usually at a lower interest rate.
Step 7 - Completing the lifetime mortgage
After you have received the offer and have reviewed the terms you can agree to the lifetime mortgage and this will be completed by the provider. You must also ensure that you have insured your property to cover the cost of rebuilding and for at least the amount set out in the offer.
When the documents are received by the provider and finalised, your solicitor will receive the lump sum payment and is responsible for paying any existing mortgage, deduct any fees and costs and pay the remainder to you. The whole process could take 8 to 12 weeks from the application.
If you have a drawdown reserve facility, you can return to equity release if you need cash for a specific reason
in the future. It could be as easy as making a phone call to the provider and receiving the funds in your bank account within a week.
The cost of the mortgage is based on the cash amount released and interest rates at that time which could be lower or higher than the original mortgage. If you do not have a reserve facility and your property value has increased due to rising house prices
, you could apply for a further advance and our advisers at London City Mortgages can offer specialist advice of the best product at that time.