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Equity Release

Learn More About Equity Release Options

Equity Release mortgages are not like residential mortgages. They help you secure a loan against the value of your property. In these guides we outline what makes them different, the eligibility criteria and help you decide if it’s an avenue you would like to pursue. It’s a way to free up money in your later years, but with many factors influencing the loan, it’s good to learn as much as you can from qualified mortgage professionals.

Posted On: January 5, 2023
Updated On: January 16, 2023

Will Equity Release Affect My Benefits?

Equity release can affect your eligibility for a range of benefits. This includes Pension Credit, help with health costs and Council Tax Support. However, it primarily depends on how you plan to use the money.

As the tax-free cash will be received as a loan, this is not the reason you could be affected.

Instead, it depends on whether you plan to stash your cash in a savings account. The amount in your savings could affect your eligibility for means-tested benefits as it could push you over the threshold.

In this guide, we’re bringing clarity to who could be affected and who wouldn’t be affected depending on how you plan to use the equity release.

Benefits that won’t be affected

  • Disability benefits and Personal Independence Payment (PIP) – these are not affected by your income or capital.
  • Paying off a mortgage.

Benefits that could be affected

  • Money that is held in excess of the threshold of the benefit threshold in your savings accounts.
  • Money for home improvements that is held for longer than 12 months.

Paying off a mortgage

For this purpose, the money won’t be paid into your bank account, rather it will be paid off directly by the lender’s solicitors. However, one thing to bear in mind is that the extra monthly savings you make from no longer paying back this mortgage could still have the potential to take you over the benefit allowance threshold, unless you’re planning to spend this cash elsewhere.

In summary, it all depends on whether or not the money is going into your bank account, how much you’re receiving and whether you accrue interest. If you go over the threshold for the means-tested benefits, you will not be eligible to receive them.

You can check your entitlement to benefits by using the Government calculator.

What about my state pension? Could it affect that too?

No, your state pension will not be affected. This is because the money is in the form of a loan, rather than income.

Considering equity release?

Speak to our professional equity release mortgage experts. We’ll make sure it’s the right option for you and make sure you’re confident with your plan. Contact us today to book your free initial consultation.

*Equity release is not right for everyone and may reduce the value of your estate.