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Equity Release &
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Retirement Interest
Only Mortgages
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beyond age 65
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beyond age 65
Inheritance Tax
Planning

How could equity release affect Inheritance Tax Planning?

If you have considered equity release, you will already be thinking about how you can use the funds to support your family and friends.

But did you know it could also help to reduce the amount of Inheritance Tax that could be payable?

If we can help you please contact us on
0800 170 7472 or complete our enquiry form.

Lending criteria

Bullet   Whether through a lifetime mortgage or home reversion scheme, equity release takes some of the value tied up in your home and releases it back to you as cash. You can then use that money for whatever you wish – perhaps to renovate your home, improve your standard of living in retirement or financially support your loved ones.
Bullet   Sounds good, you might think, but how does this affect Inheritance Tax? In short, when you release equity from your property, you subsequently reduce the value of your estate. In some cases, this could take the value of your estate below the IHT threshold. The knock-on effect from this could therefore be a reduction in the amount of Inheritance Tax payable by your estate following your death.
Bullet   Subject to early planning, you can gift your children as much money as you like while you are alive (this is called a Potentially Exempt Transfer). Luckily, the money from equity release counts as one of these gifts.
Bullet   There are some rules you need to know, however. If you gift money from equity release and die within three years, then the gift will be charged at a 40% tax rate. Any gifts made three to seven years before your death will then be taxed on a “taper relief”. This is a sliding scale that decreases the tax rate as more time passes between the gift and your death.
Bullet   For example, a gift made six to seven years before death will only be subject to a tax rate of 8%, compared to a 24% tax-rate for four to five years. In a nutshell, this means you are able to reduce the amount of Inheritance Tax your beneficiaries could have to pay, simply by planning your gifting carefully.


For more information please contact us on 0800 170 7472 or complete our enquiry form.

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Why use Equity Release Marketplace?

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Frequently Asked Questions


Who are Mortgage Marketplace?

Mortgage Marketplace Ltd is our main brand, for standard mortgage products. We keep Equity Release separate to make it easier for you to navigate our website and access our services.

How can I avoid risk with Equity Release?

All firms advising on or selling Equity Release have to be regulated by the Financial Conduct Authority (FCA). This provides protection, security and access to the Financial Services Compensation Scheme if you ever need it. You can refer any complaints that may arise to the Financial Ombudsman Service.

You should choose a product from a lender that is a member of the Equity Release Council (we will advise you on this). This is an industry body and its members agree to abide by a voluntary code of conduct. This includes certain product standards. When these standards are met it means you:

  • Can live in your property for life, or until you move into permanent residential care
  • Can move your plan to an alternative property (providing it is acceptable to the Equity Release product provider)
  • Will never owe more than the value of your home when it is sold after you die or move into permanent residential care
What are the risks of Equity Release?

Our experts will advise you on the risks and benefits, but below is a summary.

  • Equity Release reduces the value of your estate and the amount that will go to the people named as beneficiaries in your will. Your estate is everything you own, including money, property, possessions and investments.
  • With a home reversion plan, the reversion company owns all or a part-share of your home.
  • Getting a lump sum or taking extra cash to supplement your income may reduce your entitlement to means-tested benefits, now or in the future.
  • If you get care at home funded fully or partially by the local council, they may start charging you or ask you to pay more.
Who can get Equity Release?

There are certain conditions you must meet before being able to take out Equity Release:

  • For a lifetime mortgage you (or both of you, if you’re borrowing jointly) need to be at least 55 years old.
  • You must own property in the UK, which must be your main residence. If you have a buy-to-let property you can release equity with a buy-to-let mortgage even if you have retired.
  • Your property must be in reasonable condition and over a certain value, and there may also be restrictions on the type of property accepted.
  • If you have a mortgage or secured loan on your property you may still qualify for Equity Release, but it will depend on the value of your home and the amount outstanding on the existing mortgage or loan. You'll have to pay off any outstanding mortgages or loans secured against your home at the same time as taking Equity Release.
  • Equity Release may not be suitable if you have dependants living with you. Any dependants should take separate legal advice. If they wish to remain living with you in the property, they may need to sign a waiver confirming that they understand they don’t have the right to reside there if you die or move into permanent residential care.
Who regulates Equity Release products?
All firms advising on or selling Equity Release have to be regulated by the Financial Conduct Authority (FCA). This provides protection, security and access to the Financial Services Compensation Scheme if you ever need it.

You should choose a product from a lender that is a member of the Equity Release Council. This is an industry body and its members agree to abide by a voluntary code of conduct.

Speak to an expert

Speak to an equity release expert

Contact us on 0800 170 7472 or make an enquiry

The Equity Release Marketplace