If you’re happy in your home but need some extra cash to help with living costs or care as you get older, equity release may be the right option for you.
Our skilled equity release solicitors understand that the costs of retirement can be daunting and burdensome, particularly as you approach a stage in your life where you’d prefer to take things a little easier.
Equity release can provide you with the means to travel, provide for your children, and generally maintain a good standard of living after you retire.
We’ve assisted with countless equity releases and can provide expert advice about both lifetime mortgages and home reversions, as well as handling every aspect of the conveyancing process on your behalf.
We are not financial advisors and cannot advise on the suitability for a particular product for your needs. You should therefore also ensure that you seek financial advice to ensure that the product you choose is the best available option.
Our equity release solicitors’ expertise
Equity release has significantly grown in popularity in recent years as economic trends lead to increasing numbers of older people becoming “asset rich” but “cash poor”. High costs of living and demand for care are both major challenges facing the retired generation.
As a team of solicitors specialising in equity release, we understand our clients’ reluctance to leave their homes and “down-size” simply because they are approaching retirement.
We will handle the entirety of your equity release transaction on your behalf, acting efficiently and without delay, so you don’t have to put your life on hold or go through any unnecessary stress. Our expertise includes:
- Advising on the types of equity release
- Liaising with your equity release provider and current mortgage lender (if necessary)
- Reviewing the provider’s terms and explaining these and any associated costs to you
- Completing the necessary legal documentation
- Liaising with HM Land Registry in relation to the property transfer or the provider’s legal charge
What is equity release?
Equity is the difference between the value of your property and the balance of any debts secured over the property.
For example, if your property is worth £300,000 and you have an outstanding mortgage of £50,000 then the available equity in your property is £250,000.
Equity release is a method of freeing up some of the available equity in your property so you can pay for things like household expenses and care without having to sell up and move away. Most providers will only accept people over the age of 55 and there are two types of equity release to choose from:
- Lifetime mortgage – a mortgage is taken out on your home in a similar way to a normal mortgage. You can then either make regular payments or, more usually, choose to have the interest rolled up into the loan amount.
- Home reversion – you sell a share or the entirety of your property to an equity release provider subject to you being allowed to continue living there rent-free until you die or move permanently into a care home.
How does equity release work?
There are a few basic requirements to be eligible for equity release:
- You must be a minimum age of 55 years old (in some cases this will be older)
- You must own a property worth the minimum amount that the lender requires (this will usually be at least £50,000)
- The property must be your permanent residence
You will typically not have to repay the loan until the property is sold or you die or vacate the property.
How your equity release will work depends on the type you choose:
Lifetime mortgages are the most popular forms of equity release. Like an ordinary mortgage, you take out a tax-free loan which is secured over your property.
However, unlike an ordinary mortgage, you don’t have to make payments and the interest is “rolled-up” into the mortgage to be repaid after your home is sold. This can mean that over time the debt grows substantially.
An equity release provider won’t agree to offer you a lifetime mortgage unless any existing mortgages on the property are paid off. Your mortgage lender will need to consent to this if you want to repay the mortgage before the end of the term and you may be charged early repayment fees. However, we can provide detailed advice in relation to this.
Once the equity release is approved, you can receive your money either as a large one-off lump sum or as a lower initial amount with the option to drawdown more money later if you wish. You’ll retain ownership of your home and you won’t have to repay the lifetime mortgage until you die or move into long-term care.
Because interest can cause the mortgage to increase quickly, some lifetime mortgage plans allow you to make payments on the interest or even to pay off some of the capital if you’d prefer.
However, even if you choose not to make payments, it’s possible to ring-fence some of the value of your property as inheritance for your loved ones.
There’s also a risk that your property could reduce in value, however, many equity release lenders provide no-negative-equity guarantees which mean you’ll never have to pay back more than the value of your property. We’ll carefully review the terms of your equity release and provide advice in relation to this.
Home reversion involves an equity release provider purchasing a defined share or all of your home for around 30-60% of its market value. In return, you’ll be allowed to live in the house rent free until you die or move into long-term care.
Home reversion can have significant effects on tax, your loved one’s inheritance, and your eligibility for benefits.
As the house will no longer belong to you, your beneficiaries won’t inherit it or any of the available equity after you die. However, you’ll still have to maintain the property and you may have to pay some costs such as ground rent.
Despite these factors, there are still some circumstances where home reversion is the best option and we can provide in-depth advice about the implications of this form of equity release so you can make a clear decision about whether it’s right for you.
Why choose our equity release solicitors?
At Bird & Co, we aim to provide the highest quality of legal services for accessible and competitive prices.
Although we have a number of specialisms, we particularly excel in conveyancing. All our solicitors are experts in their field and can provide pragmatic advice and excellent client care across all property transaction matters.
We’re incredibly thorough in our approach, ensuring we quickly get to grips with your needs and concerns and taking immediate action so we can achieve the best possible result as soon as possible. Our firm is accredited by the Law Society in Lexcel for our excellence in client care and legal practice management.
We’re also accredited in the Law Society Conveyancing Quality Scheme which identifies the very best law firms for all property transaction matters, including house purchases, sales, mortgages, remortgages, equity release, and equity transfer.
Bird & Co Solicitors is independently regulated by the Solicitors Regulation Authority (SRA).
Our equity release solicitors’ fees
We will always be clear and transparent about our fees from the moment you instruct us. Wherever possible, we will agree fixed fees with you based on your individual needs and circumstances. This way you can be completely aware of the service you are getting and how much it will cost.
We will also discuss any third party costs (called disbursements), such as Land Registry fees, which are likely to arise in the course of your equity release.
For further information about our fees, please do not hesitate to contact us.