You may be denied the release of capital if you plan to use the funds in a way that falls outside of the scope of responsible lending. For example, investing in high-risk markets such as Bitcoin could lead to your application being rejected. Fortunately, most applications for equity release are accepted, with only 8% of cases being refused. If you have a bad credit score, it is best to discuss this with your broker before applying.
They can compare your credit history with that of lenders and advise you on how to improve your rating to increase your chances of acceptance. Generally, credit ratings are not a major issue for most equity release borrowers. More2Life has analysed why cases are rejected in order to help advisors better manage client expectations. It was found that homeowners were denied capital release last year due to mess in their properties becoming more common.
The top 10 reasons for an application being rejected were flat roofs, proximity to commercial property, atypical construction, flood risk, single-layer construction, former local authority, clutter inside the house, asbestos, proximity to electricity and spray foam under the roof. The maximum amount you can borrow with equity release is based on the age of the youngest owner, their health and lifestyle and the value of the property. The older you or your partner is, the more you can borrow. At Equity Release Supermarket, our advisors will only recommend an initial loan that meets your needs and this should be the case whenever you seek professional advice. When applying for equity release, both the owner and lender must be represented by a lawyer in order to avoid conflicts of interest. The most capital you can free up with annuity mortgages is usually around 60%, while you may be able to access a little more with a home reversal plan.
One of the main advantages of equity release is that lenders do not consider your income or expenses when assessing your application. The amount of capital you want to release will help you decide if equity release is right for you. For instance, properties in the Isle of Man are excluded by equity release providers while properties in the Isle of Wight are accepted. To determine how much capital you can release, your provider will ask a surveyor to assess the market value of your home. Equity release is a serious financial commitment and it is important to speak to an equity release broker before making any decisions. All advice on equity release is provided by Age Partnership which is authorised and regulated by the Financial Conduct Authority. It is not uncommon for the equity release process to be delayed as it is a complex and high-risk financial product.
In this first step, you typically pay an application fee, valuation fee and fees for equity release advice. If you are considering releasing capital from your property, it is important to understand that there is a chance that your application could be refused. However, with careful consideration and professional advice, it is possible to increase your chances of acceptance.