Equity Release – Lifetime Mortgages
Releasing the money in your existing property
Conventional mortgages and loans are not always available for borrowers close to or over the retirement age. Homeowners in this position may sometimes look to release the equity from their homes to raise funds for a more comfortable retirement.
Equity Release Stigma
For many people the words “equity release” will conjure up images of vulnerable pensioners being tricked into signing away all the equity in their homes and life insurance policies leaving nothing behind for their families when the homeowner dies. A modern equity release could not be further from this. There are strict rules which must now be followed when a homeowner decides to take out a lifetime mortgage. These rules include requiring the homeowner to have a separate legal representative to the lender and a no negative equity guarantee ensuring that in most cases the amount repayable under the loan will not exceed the value of the property.
What is Equity?
Equity is the value of your home less any debts secured against the property. The amount of equity in your home is often used by lenders to assess how much they will lend a prospective borrower.
What is a lifetime mortgage?
A lifetime mortgage is a common form of equity release. It is a special type of mortgage usually available to retired homeowners. The homeowner will not be expected to make any repayments on the loan during their lifetime. Instead the loan becomes repayable either when the homeowner dies or moves into long term care.
Until then interest will be ‘rolled up’ meaning the amount due to repay the amount can be a lot higher than the initial borrowing. Homeowners will be supplied with projections showing how the amount repayable could increase over their lifetime.
Should I release my equity?
Anybody experiencing financial difficulties or considering taking out a lifetime mortgage for any other reason should start by seeking the advice of a qualified financial advisor. Your financial advisor will explain the options available to you and explain whether the an equity release is the right option for you.
Residential Property & Conveyancing Team
Once you have sought financial advice, our specialist property lawyers here at Morrish Solicitors will be able to guide you through the legal process of a lifetime mortgage.
To enquire about our residential property and conveyancing services please call us on 033 3344 9600 or simply email [email protected] with your request.
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Author: Mark Laird, Head of Property
