Releasing equity from your home is a serious decision and not without risks. But with the right advice, it can provide much-needed funds to enjoy later life and/or help children to buy a property of their own.
We can provide advice on equity release lifetime mortgages. We will work closely with your financial advisor to ensure your best interests are protected. There are two types of equity release products available on the market, being Lifetime Mortgages and Home Reversion Plans. You are advised to seek assistance from a professional equity release broker in selecting the most suitable for your needs.
For specialist advice, contact our equity release solicitors today by calling us on 01202 802807 or complete our online contact form.
Equity release is where you take the equity you have in your home to generate a lump-sum payment. There is also the ability with certain products to have a flexible reserve of funds you can draw upon in the future. Unlike a traditional mortgage, there are no monthly repayments to be made to the lender. The lifetime product would be repaid from your estate when you die, or when you move into long term care and the property is sold.
All reputable equity release mortgages in the UK are protected by a No Negative Equity Guarantee, ensuring that you can remain living in your home even if the debt owed is greater than the value of your property. We only deal with ‘Equity Release Council’ regulated products.
The amount you will be able to borrow will depend on a valuation of the property, your age and health. If you have a current mortgage this will need to be repaid at the same time you draw down the equity release funds.
Interest is payable on equity release mortgages. The interest rate charged on the equity release drawdown is fixed at the date of release. It will not change regardless of any changes in the value of your property. Should you have a product with the ability to take further cash releases those additional funds will also be at a fixed rate but the lender would notify you of the rate applicate prior to their drawdown. This may be at a different rate from the initial funds you borrowed.
The main risk associated with equity release is that interest is rolled up over (compounded) and can result in the debt increasing significantly over the years. As your broker will advise there are products available under which you can elect to repay the interest each month. When you cease to do so the product would revert to the interest being compounded. Further products allow partial repayments without incurring an early repayment penalty.
Equity release is a specialist area of conveyancing law, and our practitioners have the experience required to advise on it accurately. We will ensure you fully understand the advantages and disadvantages of the equity release product you are considering.
A lifetime mortgage is the most popular type of equity release plan. You retain ownership of your home and interest on the loan is compounded. The loan and the interest is repayable after your death or when you move into long term care. For a couple, the repayment would only have to be made when the last remaining person living in the home either dies or moves into long term care. This gives you the comfort of being able to live in your home for the rest of your lives.
With home reversion plans, the provider buys all or a percentage of your property at less than market value and provides you with a tax-free lump sum payment, or regular payments.
By selling only a percentage of your property, part of your home can be protected for beneficiaries under your Will. If you sell all your home then you would become a tenant with a lifetime lease. There would be no restrictions on the ability to use your private home. This would give you the ability to remain in your property rent-free for the rest of your life.