As you begin to plan for retirement you may have concerns about your future expenses and consider Equity Release. Our expert advisors are dedicated to taking you through the legal implications of equity release and guiding you through the process.
What is Equity Release?
Equity Release is a process which allows you to release Equity (cash) that is tied up in your property. You must be aged over 55 and own your own home in order to take advantage of Equity Release. There are a number of plans that allow you to take cash from your property as a tax-free lump sum, as a regular income or a combination of both. You are usually not required to make repayments on Equity Release in your lifetime however there is now an option to make repayments in the second year.
There are two major kinds of Equity Release:
Lifetime Mortgage – You do not repay the money you release from the property until you have left the property or you pass away. Interest will accrue during the lifetime of the mortgage and will become part of the final sum to be repaid.
Home Reversion – You sell all or part of the interest on your home, in return you will receive money and a lease allowing you to stay in your home rent-free.
Why Choose Equity Release?
Equity Release is an option for those who would like money for the following:
- Living expenses
- Home improvement or repairs
- Repaying debts or mortgage
- Buying a second property
- Buying a car
- Holidays or travel
- Making gifts to friends or family
What You Need to Know
There are important things you must consider when making the decision to release Equity in your home, including:
The Cost of Equity Release - Equity Release may be more expensive than a conventional mortgage. If you take out a lifetime mortgage, you may be charged a higher rate of interest than on a regular mortgage. This means that debt may amass more quickly as interest accrues. For lifetime mortgages, there is no date by which you are expected to repay the loan and the rate of interest will not change unless you take on any additional borrowing. Home reversion plans will not provide you with an amount anywhere near your property’s market value so it may be a better option financially to sell your home. Releasing Equity from your home may mean you are unable to rely on the money invested in your property at a later date if you or your partner require long-term care.
Although it is possible to take your lifetime mortgage with you if you move home, under certain circumstances, you may however be required to repay part of your mortgage. You should keep this in mind when considering whether to take Equity from your home. The money you receive in Equity may also affect your entitlement to state benefits. You will need to pay fees to arrange your Equity Release which will be based on the plan you have chosen. There are legal costs and financial advisors fees and sometimes valuation fees.
If you decide to take an interest roll-up plan, you will be passing on less to your family in inheritance. You may wish to discuss this with them to avoid any surprises after you pass away. If you change your mind about Equity Release, these schemes can be very complicated to undo. This is why you should receive proper advice and be fully convinced that this is the best option for your future. You can pay off the mortgage but you may incur an early repayment charge.
Our specialist advisers will discuss all of these points with you fully and ensure that you are confident with your decision before proceeding with any Equity Release product.
How can Boyd Legal help?
While Equity Release can be a useful way to release funds you have invested in your property, it is important to get legal advice. Our experienced Equity Release solicitors can help; we will listen to your needs and offer guidance so you are well informed when deciding whether to release Equity from your home. If there is an Equity Release scheme that is right for you, we will help you through the entire process.
FAQs about Equity Release
Will I still own my home?
Yes. It is a common misapprehension that in taking out Equity Release you will not own your home. Equity release is a way of retaining ownership of your property while releasing part of its value. Depending on the scheme, funds can be released in a lump sum, as additional income, or both.
Will I be forced to leave my home?
Not unless you are in breach of the terms and conditions which will depend on the agreement you come to with the lender. There is no negotiation with the lender – the lender terms are what they are and we run through them with the client. Your financial advisor will find best scheme for you financially and we will discuss the legal implications.
How much does Equity Release cost?
We have a fixed fee.
If I want to sell in the next few years, can I?
Yes, but subject to an early repayment charge. We discuss all the relevant terms and conditions with you, so you know all the obligations expected of you and what you can expect from your lender.
Expert Equity Release Solicitors Edinburgh, Inverness, Aberdeen and Glasgow
For legal advice from our equity release lawyers, contact us today via our online contact form.