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Equity Release – Myth Busters

Posted on May 26th 2022

Equity Release is a popular option for many people who would like to remain living in their own homes but would like to raise some cash in order to fund their lifestyle, support a comfortable retirement, or fund home improvements, amongst many other reasons.

Is Equity Release an option for me?

You must be over 55 years of age and own your home.

Your age will be a consideration as will the value of your property, when your mortgage lender makes an assessment as to how much they are prepared to lend to you.

The benefits of Equity Release schemes are that you can remain living in your home and the lump sum and interest that is accrued on that lump sum will only be paid back from the sale proceeds when you either move into a care home or on your death.

What about if I want to move home?

It is important to note that if you did simply decide to move home, then it may be possible to transfer the Equity Release loan to a new property, but if you were to downsize and the value of your new home is less than your current home then you may be required to redeem some of the loan on the sale of your current property. It is always worth checking with your mortgage lender as to the limitations of the Equity Release loan.

Do I need to tell family members?

As solicitors, we always advise our clients to discuss with their children or other potential beneficiaries of their will that they are taking an Equity Release loan. As discussed earlier, the value of the loan plus the interest accrued on that loan becomes repayable if you move into a care home or on your death. It can come as a surprise to family members, if they are expecting to benefit from the sale proceeds of your home on your death and there is a loan that will reduce the inheritance that they would have otherwise received.

Should I be worried about negative equity?

In modern times, most Equity Release schemes now have ‘no negative equity’ provisions, which means that the debt can only be set against the value of the sale proceeds and the lender cannot claw back additional monies from other assets that belonged to you.

How can we help you?

At Oliver & Co Solicitors, we have specialist Equity Release Solicitors who would be happy to guide you through the Equity Release process. This often involves meeting with you face to face to discuss the mortgage offer and the terms of that offer and ensure that you are fully aware of the nature of the agreement that you are entering into.

If you would like to discuss Equity Release in more detail, then please do not hesitate to contact us on 01244 312 306.

Call and speak to a member of our team on 01244 312306