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Do I Need to Have a Good Repayment History to Get an Equity Release Mortgage?

You can usually get a capital release with poor credit. However, you will be required to pay certain types of debts. In many cases, you can do this with capital liberation funds. Surprisingly, you may even have a better chance of qualifying for a capital release plan, if you have a low credit score, than for a traditional mortgage.

If they are not insured on your property, then yes you can. This includes things like unsecured personal loans, overdrafts, auto finance agreements, and credit cards. As long as you manage debts effectively, they should not influence your request for capital release, although if you are late, some lenders may expect you to use some of the money released to pay off the debt. No, a low credit score won't affect the amount of capital you can release.

However, it will influence your chances of being accepted. You can use our capital release calculator to find out the maximum amount you can release. Capital release plans do not require monthly payments or any regular repayments from the landlord. For that reason, your credit history and credit rating are not rigorously evaluated as part of an application for a life mortgage or home reversal plan.

Since there are no monthly payments, you can't stop paying and your home is already provided as collateral. These factors mean that lenders are often willing to accept capital release regardless of their poor credit history. In the case of a lifetime mortgage, the most popular capital release product, interest is charged on the loan and usually accrues. This is also good for the lender, who receives a substantial amount, as well as the loan repaid when your property is finally sold.

The disadvantage of having a capital release plan with a poor credit rating is that the interest rate tends to be higher the more extensive the credit issues are. Some lenders allow you to release the capital of the property without having to apply for a mortgage or use an advance from your pension fund. A lifetime mortgage is the most popular form of capital release and a loan secured against your property. Each capital release plan operates indefinitely or until the capital release lender dies or enters long-term care.

Whether it's paying off debts or pursuing your dreams, freeing up capital may be the ideal solution for you. All options are applying for a mortgage, selling your home, or using a specialized mortgage capital release plan. If you're worried that your capital release request will be rejected, the best thing to do is get a free confidential quote. Nor are you required to make any repayments to the lender during the existence of the capital release plan.

The lender will perform a credit check on each applicant as part of the capital release application process. First of all, if you have a low credit score, don't worry, you can probably still contract a capital release plan. Some debts may have to be repaid before a capital release lender works with you. Lenders can then evaluate whether or not they want to offer you a capital release loan in exchange for a guarantee on your property.

Remortgaging to free up capital may not be impossible, although you may consider a mortgage with only retirement interest to be a more appropriate alternative. All capital release plans are designed to work until the last borrower dies or until the last borrower enters long-term care. In some cases, you may be able to use the capital you release to liquidate it, although this will often require the involvement of a lawyer and may not be possible with all lenders. All capital release requests will require an independent surveyor to review your property to ensure that it meets your lending criteria.

Nigel Cook
Nigel Cook

Coffee expert. Hardcore social media fan. Wannabe tv junkie. Amateur web fanatic. Incurable internet scholar. Infuriatingly humble travel trailblazer.

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