Taylor Scott
Equity release is a way for people over the age of 55 to access the equity tied up in their property without having to move out of their homes. While high-street banks like Santander, HSBC, and NatWest generally do not offer equity release products, some banks like Lloyds Banking Group and Nationwide do. Most high-street banks often act as intermediaries, referring customers to independent equity release advisers or specialist equity release lenders. In the past, banks like NatWest/RBS and HSBC offered equity release but later withdrew their products due to funding issues. Building societies have also had limited success with equity release products due to financial constraints and a focus on more profitable offerings. The current market is diverse and competitive, with insurance companies, finance houses, and private companies offering various plans.
| Characteristics | Values |
|---|---|
| Number of high-street banks offering equity release plans | Limited |
| High-street banks offering equity release plans | Lloyds Banking Group, Nationwide, Santander, Scottish Widows |
| High-street banks not offering equity release plans | HSBC, NatWest/RBS |
| High-street banks acting as intermediaries | Santander, HSBC, NatWest |
| Building societies offering equity release plans | Northern Rock, Nationwide |
| Building societies that tried and failed | Bristol & West, Saffron Building Society, Godiva |
| Equity release companies | Aviva, Legal & General, Liverpool Victoria, Just Group, Retirement Advantage, Age UK, Pure Retirement |
| Independent equity release advisers | Age Partnership, EveryInvestor |
| Equity release brokers | Equity Release Warehouse, Sunny Avenue |
| Types of equity release loans | Lifetime mortgages, home reversion plans |
| Eligibility for equity release | Over 55 years old, UK resident, owning a property worth at least £75,000, mortgage-free or nearly mortgage-free |
| Advantages of equity release | Access to tax-free cash, no repayment until death or long-term care, financial flexibility during retirement, inheritance protection |
| Disadvantages of equity release | Interest charges, arrangement and valuation fees, early repayment charges |
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What You'll Learn
Banks that offer equity release
While high-street banks do offer equity release, availability varies. They often act as intermediaries, working with specialist equity release lenders. For example, a bank might refer customers to a trusted equity release partner, streamlining the process and providing access to reputable providers.
Some high-street banks that offer lifetime mortgages include Santander, Scottish Widows, and Nationwide, offering flexible options through partnerships with specialist equity release providers. Barclays also offers reliability with its range of mortgage options. It is important to note that these banks may not be offering direct equity release but are instead providing lifetime mortgages, which is a loan secured against your property.
Lloyds Banking Group and Nationwide Building Society are the only major banks that offer equity release. Lloyds Banking Group encompasses Halifax, Bank of Scotland, and Scottish Widows, with Scottish Widows providing services across all its brands. Nationwide, on the other hand, does not use its own funds but lends money from an external provider.
Historically, some banks have offered equity release schemes. For example, NatWest/RBS equity release schemes were available in 2006 to long-time bank customers or retired bank staff, but they closed down in 2009 due to funding issues. Similarly, HSBC offered equity release in 2006 by tying up with the now-dissolved equity release company, In Retirement Services. Northern Rock was also a major provider of equity release mortgages, but they have since sold their equity release book to Papilio UK Equity Release Mortgages.
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Banks that don't offer equity release
While high-street banks do offer equity release plans, their availability varies. Some banks partner with equity release advisers and refer customers to external companies that provide equity release. Building societies have also ventured in and out of the market, but none have remained in the long term. Northern Rock, Bristol & West, and Saffron Building Society are examples of building societies that tried and failed due to the credit crunch.
Some banks that do not offer equity release plans include:
- Lloyds Bank: While Lloyds Bank itself does not offer equity release, its subsidiary, Scottish Widows, provides lifetime mortgages, the most common type of equity release.
- Halifax: Customers of Halifax may be referred to Scottish Widows for equity release, but it is recommended to compare interest rates and borrowing amounts with other providers.
- Bank of Scotland: Bank of Scotland previously offered a Shared Appreciation Mortgage (SAMs) scheme, but it is unclear if they currently provide equity release plans.
- NatWest/RBS: NatWest/RBS offered equity release schemes in 2006 but closed the operation in 2009 due to funding issues.
- HSBC: HSBC previously tied itself with the now-dissolved equity release company, In Retirement Services, which was considered a strange decision at the time.
It is always recommended to seek independent advice, compare options, and understand the terms and costs associated with equity release plans before proceeding.
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Equity release intermediaries
High street banks do offer equity release, but availability varies. In some cases, they act as intermediaries, working with specialist equity release lenders. For example, a bank may refer customers to a trusted equity release partner, making the process more efficient and providing access to reputable providers. While this can be advantageous, it is always recommended to seek independent advice, compare options, understand the terms, and choose the product that best suits your needs.
Some of the best high street bank lifetime mortgages for seniors include Santander, Barclays, and Nationwide Building Society, which offer financial flexibility and security during retirement, tailored to individual needs. High street banks also provide services such as savings accounts, loans, and standard mortgages, often partnering with specialist lenders to deliver lifetime mortgage options and ensure a reliable and streamlined process for customers.
Equity release may take the form of a home reversion plan or a lifetime mortgage, which is a loan secured against your property, requiring any existing mortgage to be paid off first. The money released, along with accrued interest, must be repaid upon the borrower's death or move into long-term care. High street bank lifetime mortgages can offer several benefits, such as access to tax-free lump sums or regular income, providing financial flexibility during retirement. Additionally, they allow homeowners to remain in their properties until they pass away or require long-term care. Certain banks also offer features like inheritance protection, enabling borrowers to earmark a portion of their property's value for inheritance.
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Equity release brokers
While some high street banks do offer equity release schemes, their availability varies, and they often act as intermediaries, working with specialist equity release lenders. In contrast, equity release brokers typically have more experience and contacts in the field, including relationships with high street and private banks, as well as other lenders. This allows them to structure funding requirements around your specific situation and present you with a range of options.
For example, Enness Global has brokers with experience across the board and contacts in both high street and private banking sectors. They can advise on lifetime mortgage equity release and help you assess whether it is a smart move for your financial situation, especially if the rental income from a buy-to-let property covers the loan costs and provides long-term financial gains.
Overall, while high street banks do offer equity release options, using an equity release broker can provide you with a more personalised and comprehensive service, ensuring that you make the best financial decision for your needs.
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Equity release types
There are two main types of equity release: lifetime mortgages and home reversion plans. Both are regulated by the Financial Conduct Authority.
Lifetime Mortgages
Lifetime mortgages are the most common form of equity release. They are a type of equity release that's usually for people aged 55 and over. It's a tax-free loan secured against your home. You can get some or all of it as a single lump sum or in payments of different amounts as and when you need them. You will still own your home and won't need to move, but the payments you get could affect any means-tested benefits you're receiving.
There are several types of lifetime mortgages:
- Interest Roll-Up Lifetime Mortgages: These are suitable for people who want flexibility but don't want to make monthly interest payments. They allow you to draw down your money as a single tax-free lump sum or several smaller sums without paying interest each month. However, any unpaid interest is added to your loan, so the amount you owe can grow quickly.
- Optional Payment Lifetime Mortgages: These are for those who want flexibility and are happy to make monthly interest payments.
- Payment Term Lifetime Mortgages: These are for people aged 50 and over, offering a tax-free cash lump sum. You make payments for a pre-agreed term that can run up to age 75. After that, interest is added to the loan.
- Income Lifetime Mortgages: These allow you to release money from your home as a regular, tax-free income, usually for a fixed period. You can also combine this with a small lump sum payment.
- Enhanced Lifetime Mortgages: These are for people who want a lifetime mortgage but aren't in good health. They work like standard lifetime mortgages but let you access more equity or a lower interest rate.
Home Reversal Plans
Home reversion plans are a type of equity release usually for those aged 60 and over. They let you sell between 20% and 60% of your home for cash, either as a lump sum or smaller regular payments. You may have to pay rent to your equity release provider, and your loan payments could affect any means-tested benefits you receive. When you die or move into long-term care, your provider will sell your home and take their share, but you'll never have to pay back more than the value of your home.
It's important to get financial advice and understand the risks and benefits of each type of equity release before proceeding.
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Frequently asked questions
Only a few high street banks offer equity release products, including Lloyds Banking Group and Nationwide. Most high street banks do not offer equity release products directly but may act as intermediaries, referring customers to independent equity release advisers or providers.
Banks that do not offer equity release often lack the funding structures to support longer-term lending. They are also regulated by the Prudential Regulation Authority (PRA), which sets strict guidelines on how much of a bank's "books" can be assigned to different assets, making it difficult for banks to enter the equity release market.
There are two main types of equity release: lifetime mortgages and home reversion plans. Lifetime mortgages are loans secured against your property, and home reversion involves selling a share of your property.
Equity release allows individuals over 55 to access tax-free cash from their homes without having to downsize. It provides financial flexibility during retirement and enables homeowners to continue living in their property. Some plans also offer inheritance protection.
Equity release can result in significant interest charges over time, reducing the inheritance from the sale of your property. There may also be fees and charges associated with equity release plans, and it may not be the best option for everyone, so independent advice and consideration of alternative options are essential.
