Yes, you can be refused equity release.
Equity release can provide additional funds during retirement by allowing you to access some of the value tied up in your home. However, approval is not guaranteed. Providers look at several factors before deciding whether an application is suitable.
These can include your age, property value, property condition, location and the amount you want to release.
The two main types of equity release are lifetime mortgages and home reversion plans. They work differently, so it is important to understand the eligibility criteria before applying.
It is also worth considering how equity release could affect your inheritance plans, benefits and long term finances. Professional mortgage advice can help you understand whether equity release is suitable for your circumstances.
What are the criteria for getting equity release?
Each equity release provider can have its own lending criteria, but there are several common requirements.
Age requirements
For a lifetime mortgage, applicants will typically need to be at least 55 years old.
For a home reversion plan, the minimum age is often around 60.
If you are applying jointly, the age of the youngest applicant may be taken into account.
Home ownership
You usually need to own your home to apply for equity release.
If you still have an existing mortgage, this may not automatically prevent you from applying. However, the outstanding mortgage will normally need to be repaid using the equity release funds.
Property condition
Your home generally needs to be in a reasonable condition.
Providers may arrange a property valuation and survey to check for structural issues, damp, subsidence or other problems that could affect the future sale of the property.
Property location
Location can also affect eligibility.
Providers want to know that the property can be sold easily in the future, so they may consider local demand, nearby commercial properties and other factors that could affect saleability.
Property value
Some providers may require a minimum property value.
A figure of around £70,000 is often used as a guide, although this can vary depending on the lender and product.
Existing mortgage
You may still qualify if there is a mortgage on the property.
The key point is that the existing mortgage usually needs to be cleared when the equity release plan begins.
Lending limits
There may also be minimum and maximum lending limits.
Some providers may have a minimum release amount of around £10,000.
The maximum amount available can depend on your age, property value and product type. In some cases, it may be possible to release up to 60 per cent of the property value.
Why you may be refused equity release
There are several reasons why an equity release application could be rejected.
These do not always mean you will be refused by every provider. Different lenders have different criteria.
Condition of your home
Property condition is one of the most important factors.
A provider may have concerns if the home has serious damp, subsidence, structural damage or significant wear and tear.
Properties built using non standard materials such as certain types of timber or stone construction may also require additional checks.
Spray foam insulation can sometimes cause difficulties if it affects the roof structure or makes inspection more difficult.
Flat roof
A property with a large flat roof may be viewed as a higher maintenance risk.
Flat roofs can require more frequent repairs and may have a greater risk of leaks, depending on their construction and condition.
This does not always lead to rejection, but the provider may ask for more information.
Amount being borrowed
The amount you want to release will be considered against the value of the property.
If the requested amount is too high for your age or property value, the provider may offer a lower amount or decline the application.
Property location
The location of your home can affect its future saleability.
Providers may consider nearby commercial properties, flood risk, access and general demand in the area.
A property that may be difficult to sell could be viewed as higher risk.
Legal title problems
Issues with the legal title or lease can also delay or prevent approval.
This could include restrictions on ownership, unusual lease terms or unresolved legal matters.
These problems may need to be corrected before the application can proceed.
Age
If you do not meet the minimum age requirement, the application will normally be declined.
For joint applications, the age of the younger applicant is particularly important.
Flooding risk
Properties in areas with a high flood risk may require additional checks.
Providers may look at previous flood claims and recent flooding history before making a decision.
Spending plans
In some cases, how you plan to use the money may be considered.
If the funds are intended for very high risk investments, a provider may have concerns about responsible lending.
Extensive property changes
Major renovations or structural changes can affect an application.
If work requiring planning permission is incomplete, the provider may want the renovations finished before considering the property.
Bad credit
Bad credit does not always mean you will be refused equity release.
However, undeclared bankruptcy, county court judgements or missed payments can create problems during the application process.
It is important to provide accurate financial information from the start.
What should you do if you’re refused equity release?
Being refused equity release does not always mean the process is over.
Different providers use different criteria, so another lender may take a different view of your property or circumstances.
The first step is to understand why the application was rejected.
A qualified mortgage broker or financial adviser can review the reason and help you explore alternative products or providers.
It can also help to work with an adviser who has access to a wide range of equity release products rather than a limited panel.
At Manchester Mortgages, we can help you understand your options, review your eligibility and explore suitable mortgage and equity release solutions based on your individual circumstances.
Frequently Asked Questions
Can you be refused equity release because of bad credit?
Yes, but bad credit does not automatically mean rejection. The provider may consider the type of credit issue, whether it is still active and whether it has been declared.
Can you get equity release with an existing mortgage?
Yes, in many cases. The existing mortgage will normally need to be repaid from the equity release funds.
Can you apply again after being refused equity release?
Yes. Another provider may use different eligibility criteria, so it may still be possible to find a suitable option.
Does low income affect equity release eligibility?
Low income is not always a barrier because equity release is mainly based on age, property value and the product being used rather than standard mortgage affordability.
Can property condition cause an equity release application to be refused?
Yes. Serious structural problems, damp, subsidence or unusual construction can affect approval. The provider may ask for repairs or further information before proceeding.
Should I get advice before applying for equity release?
Yes. Equity release is a long term financial decision, so speaking with a qualified adviser can help you understand the costs, risks and available options before applying.
