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We appreciate that Equity Release Mortgages are an increasingly popular way to release some of the value in your home, without moving or having to downsize. This is especially true for those who have retired. You may be looking to carry out some home improvements, assist your children financially or to travel. To obtain a lifetime mortgage you (or both of you if you are obtaining joint borrowing) will need to be at least 55 years old.
We have an experienced team able to advise you on the legal aspects of your Equity Release mortgage plans. We always advise clients considering an Equity Release Mortgage to obtain independent financial advice, preferably from an advisor specialising in this area. Before deciding whether to proceed with an Equity Release Mortgage, it is important to consider whether an Equity Release Mortgage is appropriate for you and, whether the proposed scheme matches your objectives and protects your long term interests.
We will ask you if you already have a mortgage or secured loan on your property. You may still be eligible for an Equity Release Mortgage if you do already have a mortgage or secured loan, but this will depend upon the current value of your home and the amount outstanding balance on your current mortgage. If you do proceed with an Equity Release Mortgage you will be required to pay off any outstanding mortgages or loans secured on your home at the same time as you obtain the Equity Release Mortgage. We can arrange to do this for you.
An Equity Release Mortgage may allow you to obtain a tax free lump sum payment which will allow you to live in your home until you require long term care or, pass away. You would also continue to benefit from any rise in value of your property. We recommend that you speak with a tax advisor on the tax implications that may arise and a financial adviser to ensure that the capital sum raised by the release of equity from your home does not adversely affect your entitlement to any state benefits such as Pension Credit or Income Support. We also recommend that you take advice, before proceeding.
If you obtain an Equity Release Mortgage, you will continue to be responsible for the upkeep and maintenance of your property. The Mortgage Lender will make certain stipulations requiring you to keep your property to a certain level of repair and decoration. You will also be responsible for ensuring that you have building insurance in place.
Some Equity Release mortgages are transferrable to another property (subject to certain conditions and requirements of the Lender being met) so it may be possible to move in the future should you wish to and if the Mortgage Lender is prepared to transfer the mortgage.
You should ensure that any Equity Release Mortgage you consider has a negative equity guarantee. This guarantee means the amount borrowed plus the interest you owe on the loan will never exceed the sale price of the property. This will therefore, prevent any negative equity and consequent residential charge or mortgage debt being passed onto the Executors of your Estate in the event of your Death.
Please do let us know if you have dependants living with you as Equity Release may not be appropriate for you. If your dependants wish to remain living with you at the property, it is likely that they will be asked to sign a waiver to confirm that they understand they do not have any rights to remain living at the property, should you move into long term care or pass away. It is for this reason we would always recommend that any dependants obtain independent legal advice before signing any such wavier.
Equity Release does potentially reduce the value of your Estate and we may advise you to speak with your loved ones and beneficiaries under your Will about your plans. We have an experienced Wills and Probate team who would be happy to assist you if you require any further advice in this regard. You should also consider whether your loved ones or beneficiaries may be able to assist you financially or lend you money on terms which could be preferable to corporate lenders.
We also recommend that you consider your future plans for Care. Some Equity Release schemes require you to pay off any lending if you enter long term care so it is important that this is considered.
If you would like further advice in connection with Equity Release or would like to talk to us about the costs involved in an Equity Release mortgage transaction, please do not hesitate to contact one of our offices in Chichester, Fareham or Havant. Our approachable understanding and expert team would be very happy to help.