I have a question…
From application to completion and release of funds typically takes 4 to 6 weeks for a straightforward case.
Applications under a Power of Attorney, or where there is some doubt over the mental capacity of a borrower do take longer, due to high level checks that must be made, such as obtaining GP reports.
Yes. It is an Equity Release Council rule that borrowers are independently represented by their chosen solicitor, with the lender appointing their own. This way, your best interests will be protected.
During my time serving on the Council’s Standards Board we improved this further by requiring that legal advice be carried out face-to-face. I can help you by recommending qualified solicitors and a home visit can be arranged if preferred.
It’s important that you use a reputable solicitor with experience in equity release plans as they are unlike traditional loans.
It’s your money so you can pretty much use it as you see fit. Most people want to do simple things like repaying mortgages or other debts, improving homes and lifestyle, or gifting to family. All these reasons are acceptable to lenders.
Lenders do need to know what you intend doing with their loan proceeds and may decline an application in exceptionally rare circumstances.
It is very important to me, as your adviser, that I consider your reasons for releasing equity to be safe. If I’m unhappy or uncomfortable with your plans I will tell you and may suggest that you do not proceed with your application. Reasons could include, for example, gambling, highly speculative investments, or if I feel you are at risk of being defrauded in some way.
My success is built on professional reputation and integrity. I will always have your best interests at heart.
This is principally determined by the the age of the youngest borrower. In turn, this typically determines the percentage of your property’s value which the lender is happy to release. Unlike normal mortgages, age discrimination is actually positive; the older you are, the more you can have!
For example, a 55-year-old borrower may currently raise up to 25% of their property’s value, whereas someone in their 80s may be able to raise up to 54%.
Some providers may offer larger sums to those with certain medical conditions, past health issues and lifestyle factors such as a smoking habit. You don’t have to undergo any medical examination and they will meet any cost of obtaining medical records with your consent.
It depends whether your benefits are means-tested or not. If your benefits are not means-tested then they will be unaffected. Benefits that fall into this category include attendance allowance, disabled living allowance and personal independence payments.
Means-tested benefits such as pension credit and council tax reduction support may be impacted. I will warn you if this is a possibility given your circumstances and will advise the best course of action to take.
A very definite NO! I only recommend plans from providers that are members of the Equity Release Council (ERC) and adopt the ERC’s rules and guidance. The ERC’s rules state that a provider must allow you to remain in your own home until the last borrower dies or moves into long-term care.
As a borrower, there are some common sense responsibilities you have to comply with. These responsibilities include:
- Holding a current and suitable buildings insurance policy.
- Maintaining your home to an acceptable standard.
- Informing the provider if you leave your home for a prolonged period (typically 3-6 months or more).
- Seeking permission from the provider if you wish to move an adult into your home whilst you still live there. The incoming person may be required to sign a form called a ‘Deed of Consent’ (sometimes in front of an independent solicitor at their own cost) which records their understanding that they will have to move out if you die or no longer live at the property for any reason.
Again, a very definite NO! When your home is eventually sold, the loan plus any accrued interest will be repaid from the sale proceeds with the remaining funds belonging to you – or your estate in the event of the death of the last borrower .
If the property sells for less than the outstanding loan balance, then the lender will write-off the excess under the ‘no-negative equity guarantee’ offered under the Equity Release Council’s rules.
At the time of sale, you or your family must sell your property at the going rate. If there is any likelihood that there may be a shortfall in repaying the lifetime mortgage.
That depends on what you compare it with! There isn’t another form of borrowing that offers no monthly repayments and that only needs to be repaid after you’ve died.
Clients contact me because they are wanting to generate funds. Each couple or individual has different reasons as to why these funds are important to them.
Whilst equity release is one of the most popular ways of generating risk-free funds, it is important to recognise that there are other options open to you. As your adviser, I will always work through the alternatives with you to ensure you understand the pros and cons of each of them.
Here are some of the options available to you as homeowners:
Moving/downsizing – You could access some of the equity in your current property by downsizing and/or moving to an area where house prices are less expensive. Many of my clients have already taken this step in the years before they contact me. It is a perfectly rational step to take.
An obvious downside to moving is the emotional strain of leaving the family home. Buying and selling property is a stressful activity at the best of times, and some of your equity will be absorbed by stamp duties, estate agent and legal fees, and removal costs.
New mortgage/mortgage extensions – If you have a regular income you could consider extending your existing mortgage or taking out a new mortgage on your property. This option becomes progressively harder as you get older. Many mortgage lenders, for example, will not write new mortgages if you are over 65.
Grants – If you are looking to access funds to undertake house improvements – according to the Equity Release Council the number one reason for equity release – then you should investigate whether there are grants available from your local authority or central government. I recommend doing this regardless of whether you need equity release funds or not.
Unsecured loans – The minimum amount that can be accessed through an equity release scheme is £10,000. For projects less than £10,000 you could consider taking out a standard commercial loan or borrowing monies from family or friends. Alternatively, you could draw down savings or cash-in investments.
Returning to paid employment – Changes in pension age, legislation against age discrimination and the recognition of the value of experience have opened up greater opportunities for paid employment. You could trade in some of your ‘free time’ as an alternative to equity release.
Housekeeping – In some cases pressure on cash flow can be eased simply through better financial ‘housekeeping’ For example, you could change your energy supplier, look for cheaper car insurance, or switch your mortgage provider for a better deal.