Equity Release Schemes

Some homeowners as they approach retirement may wish to explore ways to enhance their financial situation or maybe assist a family member in relation to their purchase of a home. 

An option that has gained significant popularity in recent years is that of an equity release mortgage. It allows homeowners, typically aged 55 and over, to access the wealth tied up in their property without the need to sell or move out. It can provide a tax-free cash lump sum or a regular income, offering the freedom to support retirement dreams or to assist others like a younger family member to purchase their first home. 

Equity release mortgages allows homeowners to access the equity they’ve built up in their homes over the years. This equity represents the difference between the property’s current market value and any outstanding mortgage or secured loans.  

Lifetime mortgages are the most common form of equity release. With a lifetime mortgage, the homeowner takes out a loan secured against their property while retaining ownership. The loan, along with any accrued interest, is repaid when the homeowner passes away or moves into long-term care the main reassuring feature of lifetime mortgages is the “no-negative-equity guarantee,” ensuring that the amount owed will never exceed the property’s value. You are also at liberty to pay off part or the whole of the loaned amount should you so wish. 

The need to engage a qualified solicitor is essential for equity release transactions as lenders require homeowners to obtain independent legal advice (ILA) from a solicitor. The solicitor reviews the terms of the equity release plan, explains its implications, and ensures the homeowner fully comprehends the agreement they are entering. The ILA certificate, signed by the solicitor, confirms that the homeowner has received the appropriate legal advice.