Home Equity Release
At Jackson Lees, our Residential Property solicitors have extensive experience in advising clients on the implications of taking out a Home Equity Release Mortgage.
Such products are often referred to as “Lifetime Mortgages.”
They are special loans, which are designed to run for the rest of your life or until you enter permanent long term care. It means that you can borrow money that is secured against your home to give you a lump sum sometimes with an option to draw down further funds in the future. With a lifetime mortgage you will retain 100% ownership and can continue to live at your house.
The amount that you owe to the Mortgage provider is paid back from the proceeds of the sale of your home.
What does Equity Release entail?
Equity release is an opportunity to turn equity into disposable cash. It is calculated by looking at the current value of your property, your age and current health. There is no tax payable on this type of mortgage.
Equity release schemes are available to people over the age of 55, but it should be noted that most equity release products are targeted at homeowners over the age of 60 who own their property outright or have very little left to pay on their mortgage, with no dependents living at the property.
As solicitors, we cannot comment on the financial viability of the Mortgage product offered to you, or how it compares to other products on the market. However, we make sure that you understand the legal obligations and implications that the Mortgage will have upon you, and your relatives after you have passed away. For instance receiving a lump sum can have an effect on your entitlement to means tested benefits. You should also be aware of the effect of compound interest which means the debt increases significantly over time.
Speak to Jackson Lees
If you have an equity release matter, speak to our experienced Property Lawyers online or by calling 0151 282 1700.
Our highly experienced team of Property Lawyers have helped countless clients with their conveyancing matters. We are proud members of the Conveyancing Association, a collection of the top specialist UK Conveyancers. The association aims to work proactively to improve the conveyancing process, and to formulate and implement best practice nationwide.
Whether you are buying or selling a property, or interested in transferring or releasing equity, we can help. Our solicitors can advise you on what needs to be done throughout the process.
If I take out an equity release plan, will I be able to move to another property?
Yes, you will have the right to move but it must be to a “suitable alternative property”.
There are some properties which lenders would not accept – and this is usually because there would be restrictions on their ability to sell the property in the open market when your plan comes to an end, i.e. homes which are built in retirement complex as the property will only be sellable to a restricted market and therefore harder to sell.
What impact will it have on my family?
An equity release plan could leave your family with less or no inheritance from your property. You need to ensure you are comfortable with this before proceeding, and may wish to discuss it with your family before making your decision.
A positive however is that you may be considering releasing equity from your home to help younger family members get on to the property ladder or pay for school or university fees etc.
What happens to my partner if I die?
If your equity release plan is in joint names, then your partner will be able to continue living in the property under the same terms.
If it is in your name only, then unless the mortgage can be repaid in full the property will have to be sold and your partner may have to find somewhere else to live.
If you marry after you have taken out a plan, or if someone comes to live with you as your partner, then you must inform your provider of this. It may not be possible to add your new spouse or partner to your plan, in which case they will not necessarily have the right to continue living in the property if you die or move into long term care.
How do I set up an equity release plan?
You should always seek professional advice from both a financial advisor and solicitor. It is important to explore all the options that could meet your financial needs before choosing an equity release plan.
You can find information from the Financial Conduct Authority which issues a useful guide – A Guide to Unlocking the Wealth in Your Home.
You can also get information from individual Equity Release Council members or from other qualified advisory firms.
Here are a few links that you might find useful: