Many retired people manage on small pensions and limited savings but live in properties which, even with the recent house price falls, have soared in value.
Equity Release allows homeowners over the age of 55 to remain in their homes by generating an income or a lump sum from the property. A charge will be placed against your property which will be repaid on your death or if you go into long term care. No monthly repayment are required during the term of the plan.
People have found that an Equity Release Plan can be a great way of generating capital from their home in their retirement. It therefore allows more flexibility to enjoy retirement and do things that normally could not be afforded.
Equity Release
It may not be a solution for everybody but in some instances it can be life changing.
Before deciding to take out an Equity Release Plan you MUST obtain the appropriate financial advice to ensure that an Equity Release is suitable to your specific circumstances.
The solicitors role in Equity Release
A solicitor cannot give you financial advice but will help you understand the legal aspects of the plan and deal with the legal requirements.
Clough and Willis have an equity release expert to assist you in dealing with those requirements and ensure that your experience is smooth and stress free.
When deciding on Equity Release you will have the choice of two different schemes. They include:
Lifetime Mortgages - the most popular method of releasing cash against your property. It is a loan which enables you to release money which is tied up in your home in the form of a cash lump sum. No repayments are required during the loan and it is paid off when your home is sold, or when you enter into long term care or at the time of your death.
Home reversion plans This involves selling a percentage of your home and being granted a lifetime Lease allowing you to remain in your property rent free for the rest of your life and in turn you will receive a tax free cash lump sum. When the property is sold at the time of your death the proceeds of the sale are divided between the plan provider and your estate in the percentage that each party owns.
Advantages of Equity Release Schemes
- It allows you to release your money locked up in your home for home improvements, weddings, holidays etc or to pay off existing personal debts.
- It allows you stay in your home whilst having access to your money.
- It could possibly reduce your inheritance tax bill by reducing the value of your estate on your death.
- No repayments are required until your home is eventually sold when you die or move into long term care.
- A majority of plans have a "no negative equity" guarantee.
Before you decide to release equity from your home you must understand that;
- Your eligibility for means tested benefits may be affected
- It will reduce your estate on your death and therefore you may wish to discuss it with your family before proceeding. (Depending on the size and length of your loan the entire equity in your property may be exhausted).
- Early repayment charges may apply if the loan is repaid early.
If you are considering taking out an equity release plan, ensure that it is supported by SHIP (Safe Home Income Plans). All reputable lending institutions should subscribe to the SHIP Code of Practice.
Clough & Willis have a personal approach to providing advice and a Solicitor with experience in Equity Release will discuss the documents with you before signing. For more information about equity release contact Lorraine Stratton-Webb at lorraine.webb@clough-willis.co.uk or why you should choose Clough and Willis Solicitors to give legal advice on you Equity Release Schemes and Plans please click here.
