Residential Property

Equity Release

In an era where financial stability is a prime concern for many, exploring avenues to unlock the hidden potential of your property can be extremely useful. One option which is gaining popularity is ‘Equity Release.’

Equity release is a financial arrangement that allows homeowners to access the equity tied up in their property without forcing them to relocate elsewhere or immediately start having to repay any loan secured against their home.

If you are considering, or have already commenced the process of Equity release, at Laker Legal solicitors, we can assist you through the legalities of the process.

What is equity release?

Equity release is a financial arrangement that allows homeowners, typically those aged 55 and older, to access the equity tied up in their property while retaining the right to live in it. The equity in a property is the difference between its market value and any outstanding mortgage or other debts secured against it.

There are two primary types of equity release schemes:

Lifetime Mortgages:

  • This is the most common form of equity release.
  • Homeowners borrow against the value of their property while retaining ownership.
  • The borrowed amount, plus accrued interest, is typically repaid when the homeowner passes away, sells or transfers their property, or moves into long-term residential care.
  • With lifetime mortgages, borrowers are not required to make monthly repayments, which can be advantageous for those on fixed incomes.
  • Some lifetime mortgages offer the option to make interest payments, reducing the overall debt.

Home Reversion Plans:

  • Involves selling part or all of the property to a provider in exchange for a lump sum or regular payments.
  • The homeowner retains the right to live in the property, rent free, until death or moving into long-term care.
  • Upon sale of the property, the provider receives their share of the proceeds sufficient to repay the loan and any accrued interest, with the homeowner or their estate receiving the remaining portion.

Equity release can provide you with a lump sum of funds that you can use however you desire. For instance, it provides a valuable source of additional income for retirees, helping to meet living expenses, healthcare costs, or other financial needs.

Some equity release products allow individuals to ring-fence a portion of the property’s value for inheritance, ensuring that a specific amount is preserved for beneficiaries.

It is important that you receive detailed financial advice from a financial advisor as to the product suitable for you.

What are some important considerations to bear in mind?

While equity release can provide financial flexibility for some, it is not without risks and complexities. Equity release can have various implications, both positive and negative, depending on individual circumstances.

Commonly in respect of lifetime mortgages, this is a product available to those at least 55 years old, or older.

Releasing equity reduces the value of the estate that can be passed on to beneficiaries. This should be carefully considered if leaving an inheritance is a priority.

With lifetime mortgages, interest accrues on the borrowed amount. Over time, this can result in a significant increase in the total debt. In some cases this can mean that the total amount payable to the lender can exhaust all of the equity in your property, leaving nothing for beneficiaries, such as children, after your death.

Accessing equity through certain schemes might affect eligibility for means-tested benefits, such as pension credits or council tax reductions.

Equity release can limit the ability to move to a new property or downsize, as the loan is typically repaid when the homeowner sells the property or moves into long-term care.

Equity release is a long-term commitment, and individuals should carefully consider their current and future needs before proceeding. It is imperative to conduct thorough research, seek independent professional advice, and carefully evaluate the implications before deciding whether equity release is the right choice for you.

At Laker Legal, our conveyancing team are well experienced in equity release matters. If you wish to release funds from your property, we are here to help with the legal processes and provide you with support and guidance to seamlessly conclude your transaction.

Our services in respect of this area include:

  • Verification of Identity
  • Providing independent legal advice
  • Verifying and conducting Title and Property checks
  • Preparation of the relevant Equity Release documentation
  • Registration of Legal Charges

What is the process of Equity Release?

There are different types of equity release plans. Once you have consulted with an independent financial advisor, we are available to assist you with the legal process of releasing funds tied up in your property.

We will have an in-depth initial consultation with you to ascertain your financial goals and discuss with you the legal aspects of equity release.

You should receive documentation from your Equity Release provider which outlines the terms and conditions of your chosen equity release plan, including interest rates, fees, and the impact on your estate.

It is a legal requirement to obtain Independent Legal Advice in relation to your chosen equity release product. This is a crucial step to ensure you understand the terms and conditions of the equity release agreement, discuss potential risks, and ensures you fully comprehend the legal implications.

Provided you are happy to continue and the criteria for the lender are met, you will require a valuation of your property. An independent surveyor will assess the value of your property. This valuation is crucial in determining the amount of equity you can release.

Thorough checks on the title of the property are conducted to ensure its eligibility for equity release. We will confirm ownership details, check for existing mortgages or legal charges, and ensure the property meets the criteria set by the equity release provider.

We will review the Valuation report and Title Deeds thoroughly to confirm there are no issues that may arise during the process. We will confirm that you are happy to proceed.

Depending on the type of product you choose, you may need to take out specific insurance policies. We can advise you further in respect of this, should this arise.

Once you are satisfied with the terms and have obtained legal advice, you can formally apply for equity release. The provider will review your application, and if approved, they will send you an offer.

We will prepare any legal documentation needed for the equity release transaction, such ad any documentation in respect of legal charges over your Property.

We will ensure that these documents are completed correctly and liaise with your equity release provider to complete the transaction.

We shall transfer the funds from the provider to you and any legal charges against the property are registered with the Land Registry. This step is crucial to secure the interests of the equity release provider.

Once you receive the funds, you are free to utilise them however you desire, to meet your needs.

At Laker Legal Solicitors, our highly knowledgeable and skilled conveyancing team can ensuring that your equity release transaction is handled with professionalism, legal precision, and a focus on protecting your interests.

 Contact Laker Legal to discuss your specific needs and initiate the process of unlocking the potential in your property.

You can contact our offices on 01524 753040 or alternatively, use our online enquiry form and one of our team will be in touch to assist.

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