For clients of Halifax, equity release may be an option worth exploring as they plan for their later years—but how does it all work?

Did you know that, according to a recent survey by Unbiased, only 18% of UK retirees feel fully prepared for their retirement years?¹

Exploring your retirement options with Halifax could be your key to financial security and peace of mind.

While Halifax itself does not directly provide equity release, the bank offers guidance and access to equity release products through a trusted third-party provider.

COMMENT: TimeBank.org.uk is an independent third-party data provider, and the information shared here reflects their views alone, not necessarily those of Halifax. This article is for informational purposes only and should not be considered financial advice or a recommendation to engage with any products offered by Halifax.

Who Is Halifax and What Do They Do?

Halifax is a well-known British bank that started out as a Yorkshire building society in 1852.

Today, Halifax is part of the Lloyds Banking Group and remains the largest mortgage provider in Britain.²

The bank provides a wide range of financial services, including personal banking, mortgages, savings, and credit cards.

Why Consider Halifax for Your Retirement Planning?

You may consider Halifax for your retirement planning because of its array of related products.

These include:

• Ready-Made Pension
• Self-Invested Personal Pension
• Home improvement loans

These financial products may be of use to you if you are planning your retirement finances.

How Can These Products Aid Retirement Planning?

Before we dive into equity release, let’s take a brief look at how the products mentioned above may be used for retirement planning.

How these options can help with retirement planning:

• Ready-Made Pension: A ready-made pension is a pre-constructed investment plan designed to simplify retirement savings. It offers diversified investments tailored to risk levels and retirement goals, making it ideal for those who prefer a hands-off approach. This kind of pension can help retirees build a stable income stream and manage their savings efficiently over the long term.
• Self-Invested Personal Pension (SIPP): A SIPP offers flexibility and control over investment choices, allowing individuals to tailor their retirement savings to personal preferences and financial objectives. It is particularly beneficial for those with investment knowledge or working with a financial adviser. A SIPP can enhance retirement planning by providing greater potential for growth through customised investments.
• Home Improvement Loans: Home improvement loans can support retirement planning by allowing homeowners to upgrade or adapt their homes for future needs, such as making them more energy-efficient or mobility-friendly. This can reduce future living costs or delay the need for alternative housing, ensuring comfort and stability in retirement.

While these solutions may be very useful to younger people planning for retirement, what about those much closer to the big day (or those who have already stopped working)?

Qualifying for a traditional loan can be much harder if you are retired, and pensions and SIPPs are usually taken out at a younger age.

So what are your options?

Can Halifax Help With Equity Release?

Yes, Halifax can help with equity release even though they don’t directly provide these products.

Equity release may be an option worth considering if you are in need of funds post-retirement.

Let’s take a look at how equity release works if you bank with Halifax.

How Does Equity Release Work With Halifax?

With Halifax, equity release works through Scottish Widows Bank, also part of Lloyds Banking Group.

If you are interested in equity release, Halifax will connect you with an advisor from Scottish Widows, who will discuss your eligibility and options with you.

What Equity Release Option Is Available?

The equity release option available to you through Scottish Widows Bank is a lifetime mortgage.

Key Features

Key features of the Scottish Widows lifetime mortgage include a fixed interest rate.

Other features include:

• No Monthly Payments: No interest payments are required during the customer’s lifetime.
• Drawdown Option: Customers can access additional funds in the future via a drawdown facility.
• Bereavement Protection: No early repayment charges (ERCs) apply if the remaining borrower redeems the loan after a bereavement, with no time limit.
• No Negative Equity Guarantee: Customers will never owe more than the value of their property.
• Inheritance Protection: A portion of property equity can be reserved for inheritance or care needs.
• Portability: The product can be transferred to a new home, subject to criteria.
• Further Advances: Additional borrowing may be available after 12 months, subject to eligibility.
• Cost Savings: All lifetime products include free conveyancing, a free property valuation, and £600 cashback towards independent legal fees.

Eligibility

When discussing your options with a Scottish Widows advisor, your eligibility for a lifetime mortgage will be assessed.

Factors to consider:

• Primary Residence: Available only for properties owned by the applicant(s) and used as their main residence.
• Age Limits: Applicants must be aged 55–85. For joint applications, age criteria apply to the younger applicant.
• Joint Applications: Limited to two applicants, who can be joint tenants or tenants in common.
• Loan Amounts: Minimum facility of £30,000; maximum of £1,500,000.
• Property Value: Minimum £100,000 (£150,000 for ex-Council/MoD/Housing Association properties; £200,000 for age-restricted or sheltered housing). No upper value limit.
• Location: Properties must be in the UK, excluding Northern Ireland, the Channel Islands, and the Isle of Man.
• Occupants: Non-mortgage occupants, including adult children, must sign a consent form.
• Property Requirements: Your home must be in good repair and suitable for lending.
• Deeds: Title deeds must match the applicant(s).
• Mortgage: Must be unencumbered or have any existing mortgages cleared from the lifetime mortgage proceeds.
• Ownership: You must have owned your home for at least six months unless inherited.

Benefits of Equity Release With Halifax

The benefits of equity release with Halifax include having access to the bank’s expert Later Life Lending Advisers.

Other benefits are:

• No Monthly Payments: No need to make monthly interest payments during your lifetime.
• Flexible Drawdown Options: Access additional funds in the future via a drawdown facility.
• Inheritance Protection: Reserve a percentage of your property’s value for inheritance or care needs.
• Portability: Transfer the lifetime mortgage to a new home, subject to eligibility criteria.
• No Negative Equity Guarantee: Ensure you never owe more than your property’s value.
• Bereavement Protection: No early repayment charges (ERCs) after a bereavement, with no time limit.
• Further Advances: Access additional borrowing after 12 months, subject to eligibility.
• Cost Savings: Includes free conveyancing, a free property valuation, and £600 cashback towards legal fees.

These benefits provide a measure of financial flexibility and security for homeowners considering equity release.

Drawbacks of Equity Release With Halifax

Drawbacks of equity release with Halifax include the fact that the bank does not provide this type of product directly.

Other potential drawbacks include:

• Interest Accumulation: The loan balance can grow significantly over time due to compounded interest.
• Reduced Inheritance: The value of the estate left to beneficiaries will be diminished.
• Impact on Benefits: Accessing funds through equity release may affect eligibility for means-tested benefits.
• Early Repayment Charges (ERCs): Substantial fees may apply if you decide to repay the loan early.
• No Property Purchases: The lifetime mortgage available through Scottish Widows cannot be used to buy a property.
• Property Exclusions: Certain properties, like freehold flats, commercial properties, homes with entirely flat roofs, and homes near pylons and phone masts, do not qualify. See the Scottish Widows webpage for full details.³
• Usage Restrictions: Funds may not be used for certain purposes, such as repaying someone else’s mortgage or making certain property modifications.
• Minimum Property Value: Homes worth less than £100,000 do not qualify.
• Joint Application Conditions: Both applicants must meet criteria, and decisions are based on the youngest.
• Ownership Restrictions: The property must be unencumbered or existing loans cleared using equity release proceeds.
• Costs & Fees: While some costs are covered, additional fees such as advice fees and possible legal costs may still apply.

Be sure to weigh up the drawbacks against the potential benefits of this lifetime mortgage when speaking to your advisor.

Also discuss any alternative options that may suit your needs.

How Can Halifax Support Your Financial Goals in Retirement?

Halifax supports your retirement financial goals with tailored advice, investment options, and savings plans designed to maximise your income and security during retirement.

How Does Halifax Assist with Retirement Income Planning?

Halifax assists with retirement income planning by offering a range of products tailored to meet your financial needs as you age. 

This includes savings accounts that optimise interest earnings, personal pensions that help you grow your retirement funds, and investment options designed to manage risk while providing potential growth. 

They also provide personal financial advice to help you plan effectively, ensuring that your retirement income meets your expected lifestyle costs.

What Are the Benefits of Using Halifax for Retirement Planning?

The benefits of using Halifax for retirement planning include access to financial advisors who can offer expert guidance tailored to your personal circumstances. 

Halifax’s broad range of financial products allows you to consolidate your retirement planning in one place, making it easier to manage. 

Additionally, their commitment to customer education ensures you are well informed about your options and the best strategies to secure a financially stable retirement.

How Do Halifax’s Retirement Products Compare to Equity Release?

Halifax’s retirement products, such as annuities, savings accounts, and investment opportunities, offer different benefits compared to equity release. 

While equity release provides immediate access to large sums of money, Halifax’s products focus on long-term financial security. 

These products can provide stable income through interest earnings and investment returns, which might be more suitable if you prefer to preserve your home equity and pass it on to heirs.

How Can You Get Started with Halifax’s Retirement Services?

Get started with Halifax’s retirement services by scheduling a consultation to discuss your needs and explore their diverse range of retirement planning tools and products.

What Steps Are Involved in Setting Up a Retirement Plan with Halifax?

To get started with Halifax’s retirement services, first schedule a consultation with one of their financial advisors—this meeting will help you understand the various retirement products available and identify which ones align best with your retirement goals. 

Following this, your advisor will guide you through the application process tailored to the specific retirement products you choose, whether that involves opening a new pension, investing in an annuity, or setting up a retirement savings account.

What Documents and Information Do You Need?

When preparing for your consultation with Halifax, you will need to gather several important documents and pieces of information, including your identification, proof of address, details of your current financial situation (such as income sources and existing pension plans), and your long-term financial goals. 

Having recent bank statements and any current investment records at hand will also help the advisor provide more tailored advice and streamline the setup process for your retirement plan.

Common Questions

Conclusion

While Halifax does not offer equity release products directly to clients, a lifetime mortgage is available through Scottish Widows Bank.

This lifetime mortgage comes with potential benefits like Inheritance Protection and a bereavement benefit.

Of course, looking at the potential risks and downsides is just as important.

If you are considering equity release through Halifax and Scottish Widows, speak to a qualified advisor to discuss your suitability and options.