Many older people find themselves short of money yet own a valuable property. They may think that their only option is to downsize but this is not always possible or something they want to do. There, however, are a variety of schemes available to obtain a capital sum or income to provide the homeowner with the immediate resources they need to enhance their quality of life. The most popular way to raise money on your property is Equity Release, sometimes called a Lifetime Mortgage. At Clapham & Collinge, we can advise you on the variety of schemes available and our specialist lawyers can guide you through the Equity Release process.
With Equity Release a loan is taken out based on the value of your property and your age. The loan is secured on your home by way of a Mortgage and provides you with cash to spend as you choose. There are no monthly payments and the interest on the loan rolls up each year. (You can however, choose to repay the monthly interest if you can afford to do so). Both the interest and the capital are repayable when your home is sold, when you move into long term care or after your death (or after the death of the survivor or if the survivor of you moves into long term care of you if you own your home jointly). Most schemes allow you to transfer the loan to another property should you wish to move.
More and more people are turning to Equity Release to top up their income clear debt, buy a new car, help their children or for home improvements.
Another scheme available to homeowners is the Home Reversion Scheme. With this type of scheme you sell all or part of your home to a company and you continue to live in it as a tenant on a rent free basis for the remainder of your life. In return the company pays you a percentage of the value of the property by way of a lump sum or a regular income for life. No repayments are made to the company during your lifetime but when you move into long term care or after your death (or after the death of the survivor of you or if the survivor of you moves into long term care if you own your home jointly) then the whole of the property (or part of it) passes to the company. Most schemes allow you to transfer the scheme to another property. This scheme is often used by people who wish to maximise their borrowing or need income to pay for care in their home.
Careful consideration is needed in taking out such a loan and retirement mortgages are not the right solution for everyone. Some homeowners may be better off trading down to a smaller property and releasing cash that way. People on means tested benefits could lose those benefits when receiving a sum of cash.
In order to obtain an Equity Release Mortgage you need to own your own home, generally all owners must be 55 years or older (65 years or older for Home Reversion) and generally you must need to borrow a minimum of £10,000.00.
You should always seek advice from a financial adviser who is qualified to advise in Equity Release Mortgages. At Clapham & Collinge, our role is to guide you through the risks and rewards of the plan arranged by your financial adviser and highlight any legal obligations which attach to it. Our specialist lawyers have extensive knowledge and understanding surrounding elder client's needs and concerns.
For more information on Equity Release, or to discuss your circumstances in further detail, contact us today on 01603 693500 or email us using 'Make an enquiry' form on our website. Appointments are available at our Norwich, North Walsham and Sheringham offices.