Historically, many in the industry took quite a dim view on the options available when it came to Equity Release. However, recent years have seen improved products brought onto the market which offer better protection and interest rates. This is making Equity Release a front runner when looking in to finance options – and we can see why they have become so popular!
At DF Legal, we have experience in dealing with Equity Release with a number of lenders and products. Here we focus on the main Q&A’s surrounding Equity Release and what makes them different to an ordinary mortgage:
|Q: Who is eligible for Equity Release?|
|A: Equity Release is typically available for people over the age of 55; however, each provider has their own requirements so do take advice from a broker or the lender as to their requirements.|
|Q: What types of Equity Release are there?|
|A: There are two: Lifetime Mortgage and Home Reversion. The Lifetime Mortgage is the most popular product and is more straightforward. This is a mortgage taken out on your current property and a charge is then secured against this property. The Home Reversion is less common and more complex. This is where you sell part of your home to the loan provider for a cash return.|
|Q: When is the loan repayable?|
|A: Generally, you will not have to make any repayments during the term of the loan. The loan is repayable when you pass away, leave the property or go in to long-term care. In most cases, the repayment of the loan will be covered by the sale of the property. Some products allow you to make monthly payments but you would need to discuss this arrangement with your broker or lender.|
|Q: My product has a “no negative equity guarantee”. What does this mean?|
|A: This means that, should you pass away triggering the repayment of the loan, if the amount to be repaid is more than the value of the property (i.e. there is negative equity) your beneficiaries will not need to find extra monies to settle the loan and the balance will be written off. Most products now come with this benefit but do check for this when discussing your options.|
|Q: Will the loan affect any of my current income?|
|A: An Equity Release loan can have an impact on the amount of state benefit you receive so do check with the Department of Work and Pensions as to whether your loan will impact on any benefits or other payments you receive from them.|
|Q: Do I need a legal advisor to assist with the transaction or can I deal with this myself?|
|A: Due to the specialist nature of the loan, most lenders will make it a requirement that you obtain independent legal advice on the loan. When choosing your solicitor, check that they have experience in dealing with Equity Release as this will make your transaction quicker and easier to process.|
If you have any queries on Equity Release which you feel are not answered above or you would like to speak with one of our property solicitors then please contact us so we can provide you with further information and a quote as to the costs involved.
Please note we are not financial advisors and are unable to comment on the most appropriate loan for you.