Equity Release

Many people can find themselves asset rich and cash poor.  The value of their property has increased significantly since it was bought, but their savings have dwindled over time.  This means that property can have a lot of equity in it.  Equity release is a means of unlocking that capital, without having to move to a new home.

You may be considering equity release for any number of reasons.  It could be to pay for improvements or adaptations to your property or future-proofing the home in case of illness. Or you may wish to give a sum of money to your family now, rather than after you have gone so that you can see them enjoy it.

The capital released from the home by way of equity release can be paid as a lump-sum or regular payments.  In certain circumstances there can be the option to release a lump-sum and draw down smaller sums as and when required. 

However, it is important to note that interest accrues on the amount borrowed and increases steadily over the life of the loan. 

There are two main types of equity release, a lifetime mortgage and a home reversion scheme. 

·  Lifetime Mortgage – This is a loan secured on the property and usually repaid on death.  With some products on the market, there can be the option to make payments during your lifetime to assist with lessening the amount of interest payable.  This is the most common type of product on the market.

·  Home reversion scheme – With a home reversion scheme, you sell all or part of your property for less than market value.  This is in return for a lump-sum and or/regular income.  You remain in the home as a tenant, but you are not expected to pay rent in return.  However, if the home increases in value, then you will not see the whole benefit of this

It is vital to obtain independent financial advice when choosing the correct product for your needs.

Here at Richard Reed Solicitors our specialist lawyers will guide you through the legal side of the process to complete your equity release journey.