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What makes a property suitable for an equity release lifetime mortgage?

There are a few different factors that will determine whether your property is suitable security for an equity release lifetime mortgage.

The main factors that affect the lending decision are:

  • The property’s location in the UK
  • The type of property – e.g. house, flat, bungalow, maisonette
  • What the property is used for – e.g. main residence, second home, holiday home, buy to let/investment property
  • The property’s construction

Property location: How does property location affect equity release?

The location of your property in the UK with determine the number of lifetime mortgage options available.

Equity release is available in:

  • England
  • Wales
  • Scotland
  • The Scottish Isles
  • Northern Ireland

However, not all providers currently operate in Northern Ireland or the Scottish Isles, so your options will be more limited.

This is the current situation in the equity release market and things can change. We will keep this page updated as and when things differ.

Equity release lifetime mortgages in England and Wales

If your property is in mainland England or Wales, then you currently have access to the whole market of equity release lenders.

All lifetime mortgage providers currently lend on properties in England and Wales, provided the property meets the other aspects of the lenders’ lending criteria.

Equity release lifetime mortgages in Scotland

If your property is in mainland Scotland, then you currently have access to the whole market of equity release lenders.

All lifetime mortgage providers  currently lend on properties in Scotland, provided the property meets the other aspects of the lending criteria.

Equity release lifetime mortgages in the Scottish Isles

There are equity release plans available for properties in the Scottish Isles, but there are currently restrictions meaning fewer lenders operate in this area.

This means that your choice of options will be more limited.

Equity release lifetime mortgages in Northern Ireland

For properties in Northern Ireland, the number of options is also more limited. This is because there is currently only a couple of lenders that are willing to lend on properties in this area.

How can KIS Finance help with finding a lifetime mortgage for the Scottish Isles and Northern Ireland?

If you are looking for a lifetime mortgage and you’re based in the Scottish Isles or Northern Ireland then get in touch with us.

As an independent broker, we have access to the whole equity release market. So while there are less options for properties in these areas, we will be able to provide the most up to date information about the lifetime mortgages available.

Property type: How does the type of property affect equity release?

Equity release lifetime mortgages can be secured against:

  • Houses
  • Bungalows
  • Flats
  • Maisonettes

There are currently no equity release lifetime mortgage plans available for:

  • Park homes
  • Caravans
  • Commercial properties

Equity release lifetime mortgages on flats and maisonettes

The amount that you can borrow against flats and maisonettes is worked out a little differently to houses and bungalows.

The amount of equity that you can release from a property is based on factors like your age, your health and lifestyle, the usage of the property, and the property’s value. For houses and bungalows, lenders base their calculations using 100% of the open market value of the property.

However, for the flats and maisonettes, the majority of lenders will base their calculations using 85% of the open market value of the property.

Here’s an example:

You want to release equity from your flat which is your main residence. The property is in England and it has an open market value of £250,000.

As the majority of lenders base their decision using 85% of the open market value, the lenders will consider your flat as if it was worth £212,500.

The lender will now use their usual lending criteria to determine how much equity you can release based on a value of £212,500.

So, if you have a flat or maisonette then it’s important to bear in mind that some lenders do this as this will affect the maximum loan amounts available.

Property use: How does a property’s use affect equity release?

Equity release is a product designed for properties which are being used for residential purposes, not commercial.

This includes:

  • Your home
  • A second home
  • A holiday home (excluding park homes and caravans)
  • A buy to let or investment property

This does not include:

  • Offices
  • Shops
  • Commercial units
  • Restaurants or pubs
  • Mixed-use properties that are on the same title (part commercial, part residential)

If you own a mixed-use property, for example you run a shop and live in the flat above, then you may be able to use the residential flat for equity release if the two properties are on separate titles.

Property construction: How does a property’s construction affect equity release?

All lifetime mortgage providers will lend on properties which are considered to be of standard construction. These are usually properties that are built of brick or stone with a tiled or slate roof.

Properties which are not considered to be of a standard construction will be assessed by the lenders on a case by case basis.

Lifetime mortgages for non-standard constructions include:

  • Concrete
  • Timber
  • Glass
  • Properties with thatched roofs
  • Prefabricated Cornish houses – constructed using small panels of precast reinforced concrete, fixed over a concrete frame