Equity Release

Equity release can seem daunting and confusing, especially when it comes to the legal side of things – this is where we can help you.

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What is equity release?

Equity release is a way of freeing up some of the money that’s tied up in your home, without having to sell the property. It’s an increasingly popular option for people who are looking to raise some extra money later in life.

In 2022, equity release lending was worth £6.2 billion, according to the Equity Release Council – almost double what it was worth in 2017.

But releasing equity is not a decision to be taken lightly. This is why we would always suggest speaking to a specialist before doing anything else. Our property and conveyancing solicitors are experienced in this area, and can advise you of the best course of action to take.

Can I release equity from my house?

Equity release schemes are available to anyone over the age of 55. But most equity release products are targeted at homeowners older than 60, who own their property outright or have very little left to pay on the mortgage.

Having your application for equity release accepted will depend on the condition and value of your property, too. So this is something that should be considered before you decide to go down the equity release route.

You might also want to consider whether there are other investments or assets you could sell that might be a better way for you to improve your financial situation. Think about whether the additional money you’ll gain through equity release is more valuable to you now, or later in life.

If you release equity from your home now, you might not be able to rely on the value of your property for any additional funds you might need in the future. For example, you might find yourself having to cover the cost of care fees.

We would also suggest speaking with your children or anyone who is likely to inherit the equity in your home. They might even have ideas for other ways you could ease your financial situation, without having to embark upon the equity release process.

If you’ve taken these factors into account and still want to go ahead, our solicitors can help you start the process.

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How to release equity from your home

There are two main ways to release equity from your home, and they work differently:

  • Lifetime mortgage
    This type of equity release allows you to take a loan out against your property while you keep ownership of it. You might even be able to ringfence some of the property’s value for inheritance purposes.

With a lifetime mortgage, you can either make regular repayments or let the interest build up. If the loan hasn’t been paid off when the last occupant of the house dies, it will be paid back through the sale of the property.

  • Home reversion
    This is a less popular option, and involves you selling part or all of your home in return for a lump sum of money or regular payments. You’ll still be able to stay in your property, but you’ll need to agree to insure and maintain it to a good standard.

You can reserve some of the value of the property on a home reversion loan, too. But you should bear in mind that when you die, your chosen beneficiaries will need to share the proceeds of your house sale with the reversion company.

What are the costs involved in equity release?

Depending on the provider you use for taking equity out of your home, the costs and fees involved will vary. But generally, they will involve:

  • An arrangement fee
    If you’re using a lifetime mortgage, your provider might charge you an arrangement fee to cover the cost of setting this up.
  • A valuation fee
    Some lenders might charge you for the valuation of your home, which will need to be carried out to determine how much equity you can release from your property.
  • Advice fees
    Your provider might charge you a fixed fee for the advice they provide on their products. But others will charge a percentage of the funds you release from your property.

You’ll also need to consider legal fees if you’re thinking about releasing equity. These fees typically range between £650 and £1,000. But this can vary depending on the value and complexity of your property.

Our solicitors will be upfront with you about their fees from the beginning. So there will be no unexpected costs further down the line.

I’d like to release equity from my property – what should I do?

If you’re thinking about releasing equity from your property, the first thing you should do is consult a specialist solicitor.

While there are various sources of information online about equity release, you’ll need to ensure the advice you receive is fully balanced and independent. Our solicitors will work with you closely and provide advice that’s tailored to your individual circumstances.

To find out how we could help you find the right legal representation, give us a call today. Or start your enquiry online.

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How to guides

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