What Is Equity Release?
News article published on: 22nd May 2019
With Brexit looming, the economy and in particular, the property market is full of uncertainty. Home owners are proceeding with caution.
Older home owners are thinking of alternatives to releasing money from the family home.
Refinancing through an equity release scheme is proving popular. It allows older home owners to continue living in their home, whilst releasing the equity by way of a lump sum or a series of sums.
It involves re-mortgaging your home without having to make mortgage payments during your lifetime. The lender takes a legal charge over the property and the mortgage is repaid upon your death. The final repayment will include the original loan sum and the rolled up interest.
This has its disadvantages though.
Interest rates can be high, as can arrangement fees. Equity release will normally work on an interest only basis.
Lenders often impose quite strict obligations on the home owner, including the requirement to seek their consent if you wish to undertake structural renovations to your home. Letting out your property or taking in a lodger is not usually permitted.
Entitlement to state benefits, such as the state pension, can also be affected.
Equity release mortgages ultimately reduce the value of the property left to your estate upon death. For this reason, lenders require the home owner to take independent legal advice together with financial advice.
Equity release offers an alternative to a sale and downsizing your home and may prove even more popular in years to come.
To speak with our lawyers about whether equity release is the right option for you contact expert property lawyer Maria Elliot. You can speak to Maria by calling us on 0207 485 8811 or fill in an online enquiry form.