Releasing equity involves two main types: lifetime mortgages and home reversion plans. Each works differently but offers unique benefits.
A lifetime mortgage is a loan secured against the value of your home. This loan is repaid from your estate, typically by selling the property after your passing. Your estate will have up to 12 months to repay the amount owed. The repayment will never exceed the property’s value, offering some financial protection.
With a home reversion plan, you sell a share of your property’s value, usually between 25% and 100%, to a provider. In exchange, you receive a cash lump sum, regular income, or both. These plans are generally available to individuals aged 60 and over.
Eligibility for Equity Release
Not everyone qualifies for equity release. Lenders may decline applications due to insufficient equity, poor credit history, or unsuitable property types, such as homes with thatched roofs. These factors can influence whether your application is approved.
Costs and Considerations
Equity release products come with setup costs, varying depending on your provider. For more information, explore articles about equity release costs and interest rates. Depending on their financial situation, some people may consider remortgaging with a standard mortgage.
Equity release is not a decision to take lightly. It can impact your entitlement to means-tested benefits and is a long-term financial commitment. Professional advice from a qualified financial adviser is mandatory when considering these products. This ensures you fully understand the implications and whether it suits your needs.
How Long Does Equity Release Take?
The equity release process usually takes between eight and twelve weeks. However, the timeline can vary depending on the product selected.
The initial step involves consulting a financial adviser. This ensures equity release suits your needs and helps identify the best provider and product. Once decided, your application can be submitted.
After submitting your application, your provider will arrange a home valuation. You will also need to appoint a solicitor. Selecting one experienced in equity release is advisable, as this helps prevent or minimise delays.
Delays may occur if certain issues arise, such as:
- Your property is not being registered with the Land Registry.
- An Enduring or Lasting Power of Attorney is in place.
- The property is leasehold or part of a trust.
- Complications with your buildings insurance schedule.
Your solicitor will handle these matters, ensuring the process stays on track. Once all legal checks are complete, you will receive a completion date. At this stage, legal fees will need to be paid.
By addressing potential issues early, the process can often proceed smoothly. Proper guidance from professionals is key to avoiding unnecessary delays.
