How to release equity from your house

Specialist equity release solicitor, Aimee Evenett, gives an overview of releasing equity from your property.

What is equity release?

Equity release is becoming a popular way for over 55’s to obtain funds, and statistics show growth in the market over the last year for new clients. Typically, you will retain full ownership of your property and a legal mortgage will be placed on the title deed to your property at the Land Registry. You will be able to live in your property for your lifetime and the mortgage will be repaid upon your death or your move into long-term care. Interest on the mortgage accumulates for a long as the mortgage continues, and it is usual that you are not required to make any monthly payments, therefore both the capital and rolled up interest are owed to the lender when the mortgage is repaid.

What are the risks associated with equity release?

There are risks associated with taking an equity release mortgage and these include:

• Upon your death, your estate will be reduced due to the repayment of the mortgage, and this will leave less residuary funds for your beneficiaries.
• If you take a balance of money for your benefit, and unfortunately suffer an early death, you will receive little benefit from the lifetime mortgage, however, your Estate will still be depleted on repayment.
• If you currently get welfare benefits, taking an equity release mortgage can result in these being reduced or withdrawn.

So why do people do it?

There are several reasons that people decide to take out an equity release mortgage despite any risks or associated costs, commonly:

• To fund your lifestyle and to use the money for travelling or buying luxury items.
• You need the money due to poor pension or saving choices and require the balance for big financial outlays such as home renovations or to increase disposal income.
• You want to utilise the money to help your children or grandchildren now, rather than later.
• You want to look at ways to reduce your inheritance tax liability as the value of your death estate would be reduced.

Equity release advice from Holmes & Hills

If you are looking for legal advice regarding equity release conveyancing, Holmes & Hills has experienced solicitors that are members of the Equity Release Council and can work with you throughout your equity release transaction, from receiving the offer and assisting you with meeting the requirements of your lender to completion.

Further reading