Are you looking to release capital from your home and would like to be guided through the process by experienced equity release solicitors?
Equity release becoming an increasingly popular option for the over 55s to release capital from their home. Homeowners may wish to consolidate existing debt, carry out home improvements, provide financial help to their children or grandchildren, or simply improve their own lifestyle.
However, as with all secured loans, borrowers should consider their options carefully and seek the advice of an independent financial adviser or broker.
Many people have heard of the term equity release but are less sure about what it is and what it encompasses. Put simply, equity release allows you, as a homeowner, to release some of the equity that is tied up in your house to generate a lump sum payment or an income stream once you are over the age of 55.
To benefit from equity release, the property you own must be based in the UK and be your main dwelling. In all cases, your property will need to be in a “reasonable to good” state and only some types of property will be eligible for equity release.
The property should also be worth more than a certain stated value, although this will change depending on the type of property you own and what condition it is in.
How does equity release work?
With equity release, you are able to retain your home and continue to live in it for a set amount of time (usually agreed until death or when you move into long term care) while receiving either one payment close to the value of your property, or several payments over the course of many years.
There are two types of commonly used equity release plans:
Lifetime mortgage equity release
Home reversion equity release
What are Lifetime Mortgages?
Lifetime Mortgages are by far the most common kind of equity release product and are regulated by the Equity Release Council. Homeowners can retain full ownership of their home, and the fixed interest payments on the loan can either be repaid and or rolled up.
This means that the interest does not need to be regularly repaid but can instead continue to accrue until the mortgage and interest are repaid in full upon the eventual redemption of the loan.
When it comes to a lifetime mortgage, this will need to be repaid usually when your home is sold after your death, or if your home is sold and you need to make a move into a residential care facility.
What is home reversion equity release?
Home reversion equity release is when you will gain funds from either selling part or all of your property. You will be able to continue residing in your home until your death or if you need to move into residential care on a permanent basis. If you are taking out equity release with your partner, then this is usually following the death or a move into residential care of the last surviving person.
Who can benefit from equity release?
There are some specific rules relating to who can benefit from equity release, beyond simply being over the age of 55. If you wish to take out a lifetime mortgage, this is the main requirement, however, if you wish to pursue the home reversion plan route, you must be at least 65 years of age. If you are taking out either of these equity release plans jointly, you must both reach the required age to pursue the relevant plan.
If you have an existing mortgage on your property, equity release may still be possible, though this will be dependent upon the amount you still owe. You will need to pay the balance of any mortgage or secured loan when you complete equity release.
Equity release may not be suitable if you have dependents living with you, but as long as they have no legal attachment to the home, an equity release solicitor can help you to examine your options. Your dependents will be required to take independent legal advice. Should they need to continue living with you, they will need to confirm that they understand that they have no legal rights to the home and cannot live there after you have passed away.
Pros and cons of equity release
Equity release can be a complicated process and has many pros and cons. Each type of equity release has its own advantages and disadvantages, as outlined below.
The main advantage of equity release is that you can receive an untaxed amount of money (either in one large amount or multiple small amounts) that can help to supplement your ongoing income or support your retirement without needing to move out of your home. It is also possible that you can benefit from the property increasing in value as you continue to live in it.
When it comes to a lifetime mortgage, a significant advantage is being able to retain ownership of your property and continue to live there.
Should your property become unsuitable for you to live in, you can, in some circumstances, transfer your equity release to another property. However, there are some caveats and conditions attached to this which will be unique to your circumstances and property.
One disadvantage is that equity release may not be appropriate if you are living with dependents. It is still possible to pursue equity release in these circumstances, but your dependents would need to pursue independent legal advice of their own should they wish to remain in your home.
In such a scenario, there is sometimes the option of dependents signing a waiver to state that they will need to move out once you have passed away or moved into a residential care facility permanently.
It is not possible for family members to inherit your property after your death if you have taken out equity release (unless they wish to repay the full amount owed to the lender at the time from other resources). In fact, equity release diminishes your estate’s overall value, as your property is essentially taken out of the equation.
Should you choose a home reversion plan, the company you take out the plan with will own part or all of your home, which means you are no longer the property owner.
Finally, you may find that having the extra money could reduce your access to means-tested benefits and could result in higher care costs should you require home help funded (in part or full) by your local council.
Do I need a solicitor for equity release?
When pursuing equity release, you will need independent legal advice. This can be provided by specialist equity release solicitors and is a requirement of the equity release process.
You can discuss your best options about instructing a legal professional with your financial adviser at the beginning of the equity release process.
At Elite Law Solicitors, our experienced team of equity release solicitors regularly represent homeowners taking out Lifetime Mortgages. We are familiar with lenders’ usual requirements, so can identify any possible issues early on in the transaction.
How you choose an equity release solicitor will depend on several factors. If you have an existing connection to a solicitor, you should check with a financial adviser whether they are, or have to be, on the panel of the equity release lender.
They will research and advise you whether your nominated solicitor is on their panel and meets their specific requirements. If not, they will be able to advise you as to which equity release solicitors are on their panel. It is, however, at your discretion which solicitor you choose to deal with the equity release process.
What does a solicitor do during the equity release process?
Equity release solicitors are familiar with the process and can foresee any potential pitfalls or ways in which the process may be slowed down, ensuring that your equity release is as fast and beneficial to you as possible.
When you instruct a solicitor to deal with the equity release process you will be required to sign certain declarations confirming that:
You understand the implications of taking out the equity release; and
You will continue to insure and maintain your property and submit all the documents required by the lender to the lender’s solicitors to enable the funds to be released.
How long does equity release take?
Equity release will usually take around two months to complete, however, this is based on a straightforward process. If your personal circumstances are more complicated, this could take considerably longer, stretching out into several months.
If the title to your property is not in order, or if it is still unregistered land, the procedures could take a little longer.
Once the loan offer is made the lender will usually require you to complete the equity release before a certain number of days, usually around 50. If the mortgage offer expires before the process is completed, the lender may issue a new mortgage offer with the help of your broker if you still fit into their lending criteria; however, some of the conditions, such as the interest rates payable, may change.
How much do equity release solicitors charge?
Equity release solicitors will charge advice fees during the equity release process. They may charge their fees based on the total amount of your loan, charging a percentage amount of between 1.5% and 2%. You should bear this in mind when consulting with equity release solicitors on larger loans.
At Elite Law Solicitors, we favour quoting fixed fees, which will only change if the requirements of the lender change through the process or if due to unforeseen circumstances the process is taking longer than expected.
At Elite Law Solicitors, we have a specialist team of equity release solicitors who regularly act for homeowners taking out Lifetime Mortgages.
We are familiar with lenders’ usual requirements, so can pre-empt any possible issues early on in the transaction. This helps to avoid any delays or difficulties further down the line.
The legal process always involves a face-to-face or virtual meeting between the lawyer and the homeowners. The purpose of this meeting is for the lawyer to advise you on the legal process, and to witness signatures to the security documentation. We are always willing to meet homeowners either at a convenient office location, or at their home.
Our expert equity release solicitors can deal with the legal aspect of the equity release process in an efficient and professional manner. We are independently regulated by the Solicitors Regulation Authority and our accreditation through the Law Society’s Conveyancing Quality Scheme attests to our skill and expertise in this area of law.
Once you make an initial enquiry, one of our experienced equity release solicitors will arrange an initial consultation with you, free of charge, to explain the legal process to you.
Once we understand your circumstances better, we can provide you with a clearer understanding of how we can help you. We will also provide you with a price quotation and a choice of funding methods at the outset.
“I had previously instructed Harry to act for me in a financial matter when he was at a different firm, and he did such a good job I managed to track him down at Elite Law when I needed to use his services again. I’m happy to say it was worth the effort. He and his team were exceptional – both superbly efficient, and able to make a potentially overwhelming piece of legal work easy to understand for me as a layman. I have no hesitation in recommending him or instructing him again. Excellent job!”
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