- EQUITY RELEASE
Your safety net to ensure you are fully aware of what’s at stake
Equity release is growing in popularity for all kinds of reasons, not least as a vehicle to help fund everyday costs in old age and major life events.
However, it is not for everyone, and this is where you need a solicitor to ensure you have received completely independent advice about the risks, rewards and obligations that are attached to any equity release plan that has been deemed suitable for you.
KWW is pleased to be recommended by a number of reputable local independent financial advisers (IFAs) for the task of ensuring your best interests are being served.
How the legal side of the equity release process works
Appointing a solicitor is a key requirement of the Equity Release Council Code of Conduct.
Once your IFA has recommended an equity release product for you, a checklist and instructions are prepared, which we go over with the applicant(s) in a face-to-face meeting. We will also use that opportunity to check your identity and address.
Assuming everything is in order to proceed, we will promptly comply with the lender’s instructions to ensure your new equity release lender is able to secure a legal charge against your property and completion funds are released to you.
Looking out for your best interests at all times
Taking out an equity release plan would ordinarily be seen as a big change in your financial circumstances and one that merits making or updating your will.
You may also wish to consider making a Lasting Power of Attorney (LPA) in the event you may become physically or mentally incapacitated in later life, especially if you have a drawdown product.
KWW’s specialists are on hand to draft and execute these important legal documents, giving you complete peace of mind.
– WANT TO KNOW MORE?
A deeper dive for those who have more questions
There are many reasons people might want to release equity from their home. The most common ones we encounter are for:
- topping up retirement income
- giving beneficiaries a deposit to buy a property
- providing a higher standard of living in later years
- making home improvements
- planning for Inheritance Tax issue liabilities down the line
- helping to pay for care home fees
Once your IFA has a clear picture of your overall financial position, they will walk you all the things you should bear in mind when considering equity release.
The key benefits of equity release, as we see them, are:
- The money released is free of tax and there are no restrictions on what it can be spent on
- It can allow you to enjoy a higher standard of life as you approach or enter retirement
- You can reduce the size of your estate to mitigate against inheritance tax
- You can stay in the familiar setting of your home for life or until you move to long-term care
- You can make repayments to reduce your outstanding loan
- Many providers offer a guarantee that there will be negative equity so your beneficiaries won’t be caught out.
On the downside, these are the main things to take into account:
- You will leave a reduced inheritance to your beneficiaries
- If you choose a Roll-up Lifetime Mortgage, the interest is added to the amount you owe each month. This means the amount you owe will quickly increase over time
- If you pay off more than 10% of the loan in any given year you will most likely be subject to an early repayment charge
- Releasing equity may impact your entitlement to state benefits
- Equity release can be difficult to port to another property
- It is difficult to add people to the title deeds later should the need arise.
The equity release process usually takes between 12 and 14 weeks. There are four main stages:
- Your IFA will check your eligibility and assess whether equity release is the right thing for you.
- Once you are happy to proceed you will need to appoint a solicitor – hopefully us – and get independent legal advice in a face-to-face meeting where identity checks can also be undertaken
- The IFA will submit the application and the equity release provider will contact you to arrange a valuation of the property
- Once approved, your solicitor will be granted an offer. Assuming everything is in order, the solicitor will comply with the lender’s instructions to ensure your new equity release lender is able to secure a legal charge against your property and completion funds will be released to you.
The exact timescale for these three stages will depend upon your lender and solicitor.