Equity Release Frequently Asked Questions
Daily, people ask our adviser’s lots of important and exciting questions
about equity release. We’ve therefore compiled a comprehensive list of the most frequently
asked questions that we’d like to share with you below.
Can I take out equity release on a property with a trust registered to it?
No, you cannot. The
lender
will have to agree to leave the trust in place (and we currently lack any
knowledge of any lenders who can), You must wind up the trust before you can
complete the equity release. The rules of a trust assert that all equity in
a trust must go to the sole beneficiaries.
The nature of equity release mortgages makes it necessary for
lenders to require property free from preventatives such as trusts and loans
secure before you complete the process.
Perhaps your property has a trust registered in it. We recommend you get
independent and professional financial and legal consultancy before you
proceed into arranging for a trust to wound up. The beneficiaries of the
trust will also require independent legal advice coming from you.
Can my equity release broker change the conditions at a later date?
Equity release loans are long-term contracts, and your provider (lender)
might need to review some aspects as time goes. Your adviser must explain to
you as you take out your equity release that the circumstances that are
applying at present may not remain the same a few years down the line; thus,
you must remain aware.
There are three particular areas that lenders might need consistent
reviewing: these are portability, the ability to make future withdrawals,
and the ability to make capital repayments.
Portability: The Equity Release Council rules you must be able to “port” (transfer) your plan onto another
property if you wish to move. You ensure your provider remains satisfied
with the property you want to move to represent security for your loan.
Because providers always keep their lending criteria under regular review,
a property that may have been acceptable now, may not always be
satisfactory. Thus, it
would be best if you discussed the acceptability of all alternative
properties with your provider before you commit to buying it. Otherwise, you
may find your options being limited and possibly have to repay your loan via
Early Repayment Charges.
Further Cash Withdrawals and Advances: Some providers will allow other withdrawals or advances under a
flexible ‘drawdown’ Lifetime Mortgage. But that is at their discretion, which means future accessibility to
further sums of money does not remain certain.
Perhaps your provider refuses your request for further cash sums, and you
want to switch to an alternative provider to get more money, you must first
repay your initial loan.
Capital Repayments: Options for clients to make ad hoc capital repayments are becoming a
prevalent feature of some rolled-up interest Lifetime Mortgages. The provider solely decides whether it can accept payments of this manner,
and the frequency and size each payment may be. You must discuss this with
your adviser if you would like to get a plan where you can make capital
repayments.
Mainly, you may wish to gain more knowledge about whether your provider
reserves the right to exclude options of capital repayments. If your
provider may restrict access to any Drawdown Cash Reserve during a stated
period, after receipt of a capital repayment; Also, how capital repayment
will apply to your loan account.
How old must I be to qualify for a lifetime mortgage?
You must be 55 years and above, for you to qualify for a Lifetime Mortgage.
If you’re taking out the equity release mortgage with your partner, the age of the youngest
borrower should at least 55.
Regarding a Home Reversion Plan, you must be at least 60 years old.
How long will it take to gain access to the funds?
The timescale will vary depending on your equity release provider.
However, it’s usually 8-12 weeks from the day you deliver your application
to the provider up to the date your solicitor receives the money.
What percentage can you borrow on equity release?
Can I release equity from my home without yet paying my mortgage off?
You will need to pay your mortgage off in full first. You can do this by
either using some proceeds from the equity release or other funds. Then you
can use the rest of the money released for your pleasure.
How much equity can I release?
Your equity release provider will get a surveyor to give a professional
valuation of your property, and that will determine how much you can
release. The amount you can remove also depends on your age and that of your
partner (if it’s a joint application), and your property’s value.
Some providers will also offer more considerable sums to those with particular past or present medical conditions.
Can I use the equity in my residence to buy another residence?
Yes, you can use your equity from one residence to purchase another property, and there are many perks to doing so.
If you live in an unwavering dwelling and are interested in buying a rental residence, it may make sense to use the equity in your principal residence toward the down payments on an investment property.
Can you move house with equity release?
Yes, you can. However, you must ensure that the new estate meets the set requirements by your plan provider.
Typically, equity release companies don’t lend on retirement homes. However, they might inflict additional restrictions on the type of house you can move to, as well as how the estate was constructed.
What is the minimum value for properties on which equity release is available?
Equity release providers will barely accept properties that have valued less than £70,000.
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