If you wish to free up money that is tied up in a property you own, you may be considering equity release. However, before making any hasty decisions it is important to fully understand what is involved.
Here, Nicola Tubbs, Palmers Supervising Partner who heads our Residential Property team, explains what you need to know:
“As its name suggests, ‘equity’, using part of the value of your home, is ‘released’ to you as a cash payment – either in the form of a lump sum or as a regular income.
“It’s important to be aware that there are other ways to release some of the equity tied up in your property, such as downsizing.
“It’s best to explore all available options first to ensure that equity release is the right choice for you.”
There are two main types of equity release.
- Lifetime mortgage – money is borrowed against the value of your home. When you die or move into residential care the mortgage is repaid from the sale of your property
- Home reversion plan – money is released by selling all or part of your home while you continue to live in it. The property is then ‘leased’ back to you either rent-free or on a peppercorn-rent basis. When you die or move into residential care, the reversion company will then take either part or all of your home, according to the terms of the equity release.
Nicola continues: “There are advantages and disadvantages to both types of scheme so it is important to seek independent financial and legal advice to help you decide which option is right for your personal circumstances.”
Why do I need to appoint a solicitor to help with equity release?
“Entering into an equity release scheme is a legal contract,” says Nicola. “As your home is probably the most valuable asset you own it is important to ensure that you fully understand any legal documents you sign and they are all correct and above board.
“By using a specialist independent legal firm with experience of equity release – such as Palmers – you can be assured that your interests are properly looked after.
“We will meet with you – usually in your own home, to chat through what is involved and carefully explain the process, in jargon-free terms so that you fully understand what is involved and you are comfortable that you are making the right decision.”
To find out more about our legal services for equity release, please contact us.