Please can you tell me what would happen if I took out an equity release scheme and my partner dies?
Under a SHIP approved specialist equity release scheme, providing you apply for the scheme in joint names then you will always be able to continue to live in your property under the same terms until you die or need to sell up because you need to go into care.
It is normally a requirement that if you are married or joint owners of a property at the time you take a scheme out, it must be taken out in joint names to ensure both parties have this security of tenure.
However should you later remarry or co-habitate you must inform your provider. If you want to ensure that any new spouse or partner then has the right to remain living in your property after your death, they would first need to be put on the deeds of the property and you would have to apply to the lender to add your new partner to the plan. If your new partner is below the plan minimum age this may be impossible. If they are over the plan minimum age but younger than you, because of their greater life expectancy, this could mean that under a lifetime mortgage the amount available may have to be reduced or under a partial home reversion plan, the provider may insist on you selling a greater share of your property just to include them.
Should it be impossible for you add a new partner or spouse , or should you simply not want to, then it is important that you tell any new partner that they would have no security of tenure if you die or go into care as the property would have to be sold. To ensure they knew this, any provider would also insist on your new partner signing a legal disclaimer before moving in, which would waive their rights to remaining in your property after you die or go into care. This is an important safeguard to both your family and the provider to ensure that any new partner doesn't prevent the sale of the property as this would only increase the debt under a roll up lifetime mortgage.
Under an interest only lifetime mortgage where mortgage payments are expected each month, whilst you would still retain the right to live in your property, unless your deceased partner had arranged sufficient life cover to pay off the mortgage on their death, payments would still have to be continued. Should this not be possible, you would have to either consider selling and downsizing to pay off the mortgage or consider taking out a roll up lifetime mortgage to pay off the mortgage. We would like to point out however, that future availability of such roll up lifetime mortgage schemes or them being able to release enough to pay off any existing mortgage, cannot be guaranteed