FAQ: Equity Release

How long does it take to receive the money from an equity release plan?

Thu, 06 May 2010 11:28:15 GMT

If I proceed with an equity release plan how long does it take to receive the money?

Subject to there not being any legal issues over the title to your property or needing to transfer title into sole names first, the amount of time it takes to receive the money from an equity release plan will normally be about 6-8 weeks for a lifetime mortgage or 10-12 weeks for a home reversion plan, although actual times will in part depend on how quickly you deal with any paperwork or requests for documents and how efficient your solicitor is. This is why it usually pays to use a solicitor who specialises in equity release. If you do not know one near to you we can help you find one.

To find out more about the different steps involved please link to process.

Will equity release affect state benefits?

Thu, 06 May 2010 11:52:23 GMT

If I take out an equity release plan will it affect entitlement to State benefits?

Yes it can. State benefits are a complex subject so we would recommend that you consult the Benefits Agency, Citizens Advice Bureau or Local Authority before taking out any equity release plan to check you entitlement. We would advise this because if you are not already getting any means tested State benefits, should you be entitled, it could prevent you even needing to take out an equity release plan or if you are already getting benefits taking out an equity release plan could affect your ability to continue to receive them.

It does however, only potential affect entitlement to means tested benefits such as Pension Credit, Income Support and Council Tax. It does not affect your State Pensions nor Disability benefits such as Disability Living Allowance (DLA) or Attendance Allowance (AA).

The possible effect on benefits is something our adviser would consider in our initial free home consultation. Our adviser is experienced in assessing possible entitlement to state benefits and discussing whether equity release would be right for you. If you would like to benefit from a professional free initial discussion, please complete our online enquiry form.

Can I use equity release schemes to pay off my ex?

Tue, 04 May 2010 02:37:26 GMT

I am getting divorced and want to know whether I can use equity release schemes to pay off my ex?

The answer to this will in part depend on how old you are. Specialist lifetime mortgage equity release schemes requiring no monthly repayments are only available if you are at least 55.

Whilst technically the money released under an equity release scheme can be used for any legal purpose, in practice whether it would be sufficient on its own to pay off an ex, will depend on how much your ex wants to relinquish any ownership in the property and how old you are. If they want the customary 50% it would be highly unlikely that you could release enough unless you were about 90 under a lifetime roll up mortgage, or possibly 75-80 under a home reversion plan. However if you agreed that they would only require a much lower amount or you have other assets to help reduce the amount required from an equity release scheme then yes it might be able to allow you to pay them off and gain full title to your property.

To get an immediate idea as to whether a roll up lifetime mortgage scheme could potentially release enough, try our online equity release calculator.

Even if you could raise enough some equity release scheme providers will not issue a offer of money prior to your ex's interest in the property being relinquished in your favour. In most cases this is impossible without the money being released. However, other providers will issue an offer prior to decree absolute and conditional that the money will only be released to your solicitor simultaneously with your ex relinquishing all rights over title to the property.

To explore your options please complete our online enquiry form or call us on FREEPHONE 0800 970 4883

Equity release and long term care?

Thu, 06 May 2010 02:05:39 GMT

If we go ahead and take out an equity release scheme, what happens if we then need long term care?

In the case of all Safe Home Income Plan (SHIP) approved equity release schemes, all applicants retain the right to live in their property until the last applicant either dies or goes into permanent long term care. Then the property is either sold by your family or executor, in the case of a lifetime mortgage equity release scheme, and the loan repaid and any surplus kept either by you to pay for your care or your executor to form part of your estate.

In the case of a home reversion plan, the home would generally be sold by the reversion company and any value of interest you retained in the case of a partial home reversion plan, would be returned to you or your estate.

Under either type of equity release scheme, the property would only need to be sold when the sole surviving applicant needed to go into permanent Long Term Care. There would be no need to sell it when the first applicant needed to go into care, nor is there any need to sell it all the time you receive long term care at home. Indeed equity release schemes can be a very useful way of helping people maintain their own independence, paying for adaptations to your home or to pay for additional carers.

If you are thinking of taking out an equity release scheme towards paying for long term care at home, please talk to us on FREEPHONE 0800 970 4883 as not only are we equity release specialists, but our Principal Keith Hargraves is an experienced Long Term Care adviser.

Is money received from equity release taxed?

Thu, 06 May 2010 02:11:12 GMT

I am looking into releasing equity from my home and want to know if the money received from an equity release scheme is taxed?

No: Currently the money released by way of an equity release scheme taken out on your principal residence would be free of both Capital Gains Tax and Income Tax. However, any interest earned or growth received from any lump sum deposited or invested would be potentially liable to tax. That's one of the reasons why its normally poor advice to take out more money than you need to achieve your immediate goals.

A drawdown lifetime mortgage allows you to create a maximum facility but only take what you need now (subject to plan minimums) and leave the balance to drawdown over a period of time. Further drawdowns can normally be taken as often as you like and from as small an amount as £2,000 a time, until you have used up all your facility. This way you only incur interest on the amount actually taken and not the facility, helping you to preserve more equity in your property for later use or to leave as an inheritance, and helps avoid you paying tax on any money released.

To discover more about drawdown lifetime mortgages and look at their advantages and disadvantages visit drawdown lifetime mortgages.

Similar benefits can be obtained by doing a partial home reversion plan.

If you would like to discuss drawdown lifetime plans or partial home reversion plans further, please call us now on 0800 970 4883.

Will I need to alter my Will?

Fri, 07 May 2010 05:18:43 GMT

If I take out an equity release plan will I need to alter my Will?

Not necessarily. A lot will depend on whether your Will just specifies quite large individual monetary legacies or if it simply leaves your residual estate (after paying off debts), to your chosen beneficiaries in whatever percentages you would like. If the former, yes we would suggest you change it as there may not be sufficient equity left, after paying back the equity release, to meet these legacies. If however, your Will simply distributes your remaining estate in whatever percentages you want, there should be no particular need to alter it.

However, if you are taking out equity release to perhaps help just one child/beneficiary now, you might want to redraft your Will to try favour any other children in an attempt to be fair, bearing in mind the increasing debt (under a roll up lifetime mortgage) or share of property given up (under a home reversion plan) incured in helping just one now. Certainly we would recommend you make a new Will if you are taking out equity release to pay off an ex on divorce.

There may of course be many other reasons why it might be sensible to reconsider your wishes, including:

Changes in your family since you last made your Will.
Where you have re-married since last making it as marriage revokes any earlier Will.
Cohabitating with someone who you would like to make provision for on your death, as co-habiting partners who are not married and are not joint owners of assets, have no automatic right to anything if you die without a Will.
Wanting to reduce the amount of your property value which could be taken into account in any future care needs assessment.
Changes in who you would now like to benefit.

For more information about Wills visit Wills.

Whether or not you do want to make a new Will, one thing you should consider making is a Lasting Power of Attorney.

What is a Lasting Power of Attorney?

Whilst a Will is sensible, it only comes into force once you die. Unfortunately, there may come a time when you need someone else to handle your financial affairs for you because of frailty or accident.

If so and you haven't made a Lasting Power of Attorney, no one, including your own children, can handle your bank account or even request further withdrawals from any drawdown lifetime mortgage, as they haven't got any legal authority to do so. In such circumstances all they can do is to apply to the Court Of Protection to become a Deputy for you, but this is time consuming , bureaucratic and costly.

It is much cheaper and easier to prepare for this eventuality by making a Lasting Power of Attorney and appointing someone you can trust to be an Attorney for you in such circumstances. This can be an adult child, friend, family or even professional person such as an accountant and can be either just one person or two or more. Such LPA's can be written to only become operative once you become incapable of handling your own affairs, so there no need to fear that you will immediately lose control of your own money.

How to make a Will or Lasting Power of Attorney?

Clearly if you do not have a Will or Lasting Power of Attorney, whilst it wouldn't be necessary to make one simply to take out equity release, we would suggest that it would make sense to consider making one either with your family solicitor or through a firm of professional Will Writers who are usually cheaper than a solicitor, and offer to visit you to discuss your requirements at a time convenient to you.

Through our connection with a professional firm of Will Writers we are able to offer all our clients the chance to make either a Will or Power of Attorney at very modest cost. If you would like to find out more about Wills or Power of Attorney then please visit our specific pages on Wills or Power of Attorney or if you would like to make one please complete our online enquiry form and type Will or Power of Attorney in the comments box.

What happens if my partner dies?

Sat, 08 May 2010 12:48:53 GMT

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

Can you do equity release on listed properties?

Sun, 09 May 2010 07:49:21 GMT

I have tried to get an equity release plan on my property but been turned down because it is a listed property, can you help?

Yes, because we are independent and have an extensive database of all lenders criteria we have arranged several equity release schemes on listed properties for our clients.

Unfortunately you forgot to mention whether your property is Grade 1 or Grade 2 listed. We do have several lifetime mortgage equity release lenders willing to consider Grade 2 but only a few willing to consider Grade 1. Whether any lender will be willing to lend will ultimately depend on what their appointed valuer says about the condition and desirability of your property. As many listed properties are older, it may be that your lender turned it down because there were problems with damp or woodworm rather than just the fact that it was listed.

If you would like us to help, please call us on FREEPHONE 0800 970 4883 today when we will be pleased to help, or complete our online enquiry form.

Is there a maximum age for equity release?

Sun, 09 May 2010 09:02:14 GMT

My mother is aged 95, still living at home, but could do with releasing some money to pay for care. Is there a maximum age to apply for equity release?

No, although some lifetime mortgage lenders may be unwilling to lend due to your mother's life expectancy and the limited amount of time for them to accumulate interest, other lifetime mortgage lenders will, providing your mother can understand what she is applying for. If she can't you might have to first apply to become a Power of Attorney for her before you apply on her behalf.

If you would like to find out more about what a Power of Attorney does click on Power of Attorney.

As your mother is looking to release money to pay for care, before releasing equity we would first suggest that you check that she is not entitled to free home help from her Local Authority, as this could help preserve more capital in her property.

Should you mother be unable to get any help, or is already receiving her maximum entitlement and would like more care, as she will only have to pay for such care as and when needed and you can't be certain as to how long this care will eventually need to be provided for, you might like to look at drawdown lifetime mortgages. These schemes are a variation of a lifetime mortgage equity release scheme, will allow her to set up a maximum facility at the outset but within plan minimums only drawdown money in intervals, as and when she needs to pay for care. This will help keep the debt down as interest is only accumulated on any amounts withdrawn and not on any facility created but not yet taken.

You could also get a home reversion plan for someone of her own age but as these schemes work on the basis that your mother sells a percentage of her home's ownership to a reversion company in return for a discounted lump sum and most lenders do not give more than 60% of the value, this could turn out to be very costly in terms of equity lost should your mother just die or needs to go into full time care shortly. Likewise even though you can do partial home reversion plans, reversion companies may insist on your mother selling either 25% of her property or enough to raise £25,000 initially, which might be more than she needs. Another problem is that as each share sold is a separate legal transaction, it can take 3 months to sell further shares and raise more money.

Expert advice

Equity release can be a very good way of allowing people to receive any care at home. However, the rules surrounding long term care and the need for a Power of Attorney are complex and need to be fully understood before entering into an equity release scheme for care purposes. For this reason apart from seeking advice from a specialist equity release adviser, we would recommend that you seek advice form one which is also authorised to give advice on Long Term Care.

The Equity Release Centre Principal, Keith Hargraves is authorised to give advice on Long Term Care matters and therefore we are ideally placed to give you expert impartial advice on whether equity release would be suitable for your mother. If you and your mother would like a personal home consultation to discuss her long term care needs and equity release please complete our online enquiry form.

To find out more about Long Term Care, please visit our specialist long term care website at www.adviceoncare.co.uk

Is there a minimum age?

Sun, 23 May 2010 01:06:12 GMT

I am interested in getting some money from my home, is there a minimum age for equity release?

For specialist equity release lifetime mortgages with no monthly repayments, the minimum age is 55 and this applies to the youngest applicant in joint cases.

For home reversion plans the minimum age is usually 65.

However if you are under 55 we may still be able to help you with raising some money by an ordinary mortgage, as unlike some other specialist equity release advisers we are also full mortagge advisers.

So whether you are under 55 or not and woulod lilke to consider releasing some equity from your home complete our online enquiry form and we will call you back to discuss how we could help as soon as possible.

Can I get more if I have poor health?

Sat, 04 Jun 2011 06:40:52 GMT

If I have poor health can I get an equity release provider to lend me more?

Yes providing you are over 55 and the sole applicant, or if a joint application - both of you are aged 55 or more and both of you suffer from poor health we can find you SHIP approved equity release lenders willing to offer impaired health lifetime mortgages. Poor health includes any of the following:-

Current smokers who have been smoking in last 10 years and smoke at least 10 cigarettes a day.
High blood pressure.
Heart attacks providing it has required hospital admission.
Diabetes providing insulin dependent.
Strokes (but not mini strokes - TIA's).
Angina providing it requires ongoing treatment.
Cancer excluding skin cancer or benign tumours.
Parkinsons Disease.
MS
Or even if been retired on ill health grounds.

Find out how much you may be entitled to?

Due to the individual nature of such illnesses, our equity release calculator will not take such conditions into account. So if you and any partner would qualify and you would like to find out just how much you could release under an impaired lifetime mortgage, please call us on FREPHONE 0800 970 4882 or complete our online enquiry form for a full enquiry and mention your medical issues in the any other comments box provided. We will call you back as soon as possible.

Can I still move after taking equity release?

Sat, 04 Jun 2011 08:59:49 GMT

If I take out equity release on my current home can I still move?

Yes. This is one of the guarantees provided by SHIP which any any approved lender must allow without penalty.

In practice with a roll up lifetime mortgage, instead of having to pay off any accumulated debt and only having the balance available to buy any new property, all that happens is that providing you are moving to an acceptable property* located in the UK, you can nomally just carry over the full accumulated debt from your old property to the new one, providing the new property's value is sufficient. Should the new property's value be lower the provider does a new calculation to see how much they would be willing to lend you, based on your age at the time of the move and the new property's value. If this, because of your increased age is greater than the outstanding debt you can still transfer the original debt over. If it is insufficient you will only be able to transfer over the amount of debt your new property can allow and you will have to repay any difference. This difference would, however, normally come from any money made by downsizing, incurs no penalty and is only required for the benefit of everyone to keep the new debt in sensible proportion to the new homes value.

If however you have already taken a home reversion plan and have sold all of the ownership of your current property to the plan provider, you can still move but the provider will have to be happy that the new property is suitable and if it is, they will own the new property but also they will keep any profit if you downvalue as your original amount of money received from the original reversion plan was based on your original homes valuation (which was in this case higher). If you have previously only done a partial home reversion plan on your current home and want to move down market, to avoid you having to repay any money, the reversion plan provider will ask for a higher percentage ownership of your new home. They will however also take a percentage of any money realised by downvaluing and you not them, would normally bear all of the costs of selling and moving.

*Acceptable property will depend on individual plan providers but generally any standard constructed privately owned property (brick or stone built walls, tiled or slated pitched roof) which is located in England and Wales and (depending on provider-Scotland) and is freehold or leasehold with more than 80 years remaining on the lease, would be deemed suitable subject to individual valuation.

Find Out More

If this has helped put your mind at ease, why not find out more about equity release by clicking on equity release schemes, discover how much you could release on a lifetime mortgage by using our free online equity release calculator or contact us via our online enquiry form or by phoning 0800 970 4883