We have noticed that the amount of enquiries for assistance for equity releases have increased. It’s perhaps not surprising with the cost of living and pension performance.  

What is equity release? 

Equity release is a way of releasing cash from the equity in your home without having to move.

It often provides a solution for customers who:

• have a property with an interest only mortgage which is coming to an end and cannot pay it off.
• don’t wish to down size or sell the property.
• own a house with no mortgage but are struggling with the cost of living or a combination of both.
• use it as a way of raising capital for family members to assist them in buying a house and getting on the property ladder whilst they are alive.

What are the types of equity release? 

There are two main types of equity release:

Lifetime mortgage. This is the most common type of equity release. You borrow money secured against your home. The mortgage is usually repaid from the sale of your home when you die or move permanently into residential care.

Home reversion plan. You raise money by selling all or part of your home while continuing to live in it until you die or move into permanent residential care.

How do I know if I qualify for equity release?

Generally to qualify for equity release you would have to meet the following criteria:

• For a lifetime mortgage you (or both of you, if you’re borrowing jointly) need to be at least 55 years old.
• Your property must be in reasonable condition and over a certain value, and there may also be restrictions on the type of property accepted.
• You must own property in the UK, which must be your main residence.
• If you have a mortgage or secured loan on your property you will have to pay off any outstanding mortgages or loans secured against your property on completion of the equity release.
• For a home reversion plan you (or both of you, if you’re taking out a plan jointly) need to be at least 65 years old.

Equity Release is not for everyone 

Different providers and products can have different features and it’s important that you consider these with your financial advisor.

We've outlined some of the general advantages and disadvantages below of both types of equity release, but you should seek further advice.

Advantages

• With a lifetime mortgage, you continue to live in and retain ownership of your home.
• You can get a tax-free lump sum and/or smaller, regular payments to supplement your income, and can continue to live in your home until you die or move into permanent residential care.
• You may continue to benefit from any rise in the value of your property.
• You can still move to a suitable alternative property in the future, as equity release is transferable. It will be subject to your new home meeting the property suitability criteria applicable at the time.
• There are products with a fixed interest rate throughout the whole term.

Disadvantages

• Equity release reduces the value of your estate and the amount that will go to the people named as beneficiaries in your will. Your estate is everything you own, including money, property, possessions and investments.
• With a home reversion plan, the reversion company owns all or a part-share of your home.
• Getting a lump sum or taking extra cash to supplement your income may reduce your entitlement to means-tested benefits, now or in the future.
• If you get care at home funded fully or partially by the local council, they may start charging you or ask you to pay more.
• If you are on benefits or entitled to benefits now or may be in the future these may be affected
• Equity release may not be suitable if you have dependants living with you. They will need to sign a waiver confirming that they understand they don’t have the right to reside there if you die or move into permanent residential care.

We would reiterate to get advice from a fully qualified and experienced equity release adviser. They will review your personal circumstances and see if there are any possible alternatives. If equity release is the right option, they’ll provide a recommendation of the type that best suits your requirements.

Regulation and protection 

All firms advising on or selling equity release have to be regulated by the Financial Conduct Authority.

Whilst most products arranged via a specialist broker will be you should ensure the provider is a member of the Equity Release council. This is an industry body and its members agree to abide by a voluntary code of conduct. This includes certain product standards. When these standards are met it means you:

• can live in your property for life, or until you move into permanent residential care.
• can move your plan to an alternative property (providing it is acceptable to the equity release product provider).
• will never owe more than the value of your home when it is sold after you die or move into permanent residential care.
• We are unable to provide financial advice or advise on the products available or specific requirements and it’s important you always get advice from a specialist equity release adviser before taking out equity release.
• We do work closely with a number of specialist advisors and would be happy to put you in touch to discuss your own individual circumstances.

Location 

Our Solicitors are able to provide expert advice across the country with a network of offices based in: Chesterfield, Nottingham, Mansfield and Derby.

How to get in contact 

Our team are on hand to help you and can assist wherever you are based. Please call us for a no-obligation, initial discussion on 0330 333 2613 or email enquiries@elliotmather.co.uk and we will call or email you back.

• Residential