For homeowners, equity release lending is becoming more popular than ever for those who want to extract some wealth from their property. But what is it and why are more people choosing to go down this route?
Equity release is a way of accessing the money which is secured in your property. It is available to those over the age of 55. It works well for those who don’t wish to downsize but would like some more cash, perhaps for retirement, as it can supplement your pension income. In addition, equity release provides a ‘living inheritance’ for members of your family if you wish to gift them some money or maybe pay for school fees.
Using your house as collateral, you may be able to qualify for a loan with a low interest rate which can be either taken in small amounts over time or as a lump sum or perhaps a combination of the two. The amount will depend on how much your property is worth and the amount of the loan.
There are two options for equity release. The first is a lifetime mortgage designed so that you do not make monthly payments, the interest is built up and the sum you owe will be paid off when you die or move into a residential care home (It is possible to make monthly payments if you prefer). You retain the ownership of your property.
The second option is called a home reversion. This involves selling all or part of your property to a provider company and in return, the company will pay you a tax free lump sum or agree a regular income for you or a combination of both. You will be able to continue living in your property as a tenant but free of rent for the rest of your life. When the property is sold, the net sale proceeds are divided and the company will take its share.
If you are actively considering equity release or have received an offer from an authorised provider, we have the expertise to give you independent legal advice to ensure that you fully understand the implications of the agreement that you are about to sign.
We are a member of the Equity Release Council.
Please contact Carol Blakey, head of our Residential Conveyancing department for further information. Carol can be reached by email at email@example.com or telephone 01273 716611.
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