Equity Release Solicitors Romford, Upminster, Brentwood

What is an Equity Release Mortgage? Equity Release Process Explained.

Equity release mortgages allow you to release funds from your property whilst continuing to reside there. An equity release mortgage allows you to release a lump sum so you can improve your property, pay off your debts or take a holiday. Equity release requires specialist legal advice and financial advice. There are two types of equity release options a Life Time Mortgage or a Home Reversion.

Importance of Independent Legal Advice in Equity Release

Mullis and Peake LLP Solicitors are members of the Equity Release Council (ERC). The Equity Release Council is the industry body for the equity release sector and it represents not only the providers, but the financial advisers, lawyers, intermediaries and surveyors who work in the sector.

One of the main objectives of the ERC is to ensure that the products available are safe and accessible to consumers and that there are safeguards and guarantees in place to provide protection.

In addition, all members of the ERC must abide by the overarching principles of the Council which are to:

  • Ensure that their actions promote public confidence in equity release as a potential retirement solution
  • Act at all times in utmost good faith
  • Communicate high expectations for equity release outcomes in all our dealings
  • Ensure conflicts of interest are managed fairly and reduced to the lowest practical level
  • Exercise due skill, care and diligence in all that they we do and uphold the standards set out by our professional bodies at all times
  • Always act with the best interests of our clients being paramount, treating customers fairly in all our actions

Legal and Financial Implications of Equity Release

Many clients turn to equity release mortgages because they do not qualify for traditional mortgages usually as they are not in full time employment or are retired. An equity release mortgage generally does not have monthly repayments but rather the monies have to be repaid by the borrower on death when the property is sold or when the borrower moves into long term care.

Benefits and Risks of Property Equity Release

The benefits of equity release are that the tax-free cash allows you to remain in your home and offers a no negative equity guarantees. The risks of equity release are that it can reduce the value of your estate and can impact means-tested benefits, it also accumulates interest..

Residential Property Enquiry

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Home Reversion Plan

In its basic form, all or part of your home is sold to a private company known as a ‘reversion company’ or group of individual investors, and in return you will receive a cash lump sum, an income or both. You can remain in the house rent-free, for a nominal monthly rent, for the rest of your life. When the property is sold, usually after your death or when you move into alternative accommodation, the reversioner receives the proceeds of sale, depending on what share of the property you have sold.

Lifetime Mortgages

With a lifetime mortgage you borrow against the value of your home releasing a loan which can be used to provide an income, a lump sum, or both. The loan does not have to be repaid until you die or move to alternative accommodation. Interest, usually at a fixed rate, is compounded monthly and ‘rolled up’ and added to the outstanding loan or you have chosen to make monthly interest payments for the duration of the term.

Home Reversion Plan

When do you need an equity release solicitor?

It is a good idea to get an equity release solicitor as they can ensure you receive independent legal advice about the obligations and risks of an equity release plan.

Who Is Equity Release For?

Equity release is for those that are over the age of 55 years old. It is for those that are property rich but cash poor as it would free up some equity (cash) tied up in your home. This cash could be used for everyday living, home improvements, holidays or anything you wish to use it for.

When do you need an equity release solicitor?

Pros And Cons Of Lifetime Mortgages

Pros of a lifetime equity release mortgage are:

  • You can continue to live in your home.
  • You have protection with the ‘no-negative equity guarantee’.
  • Lump sum or a drawdown facilities are available on a lifetime mortgage plan.
  • Allows you to access tax-free cash to spend on the lifestyle you want.
  • Some have the option of no regular payments.

Cons of a lifetime equity release mortgage are:

  • The value of your estate will decrease resulting in reduced inheritance
  • Your entitlement to certain state benefits may be affected.
  • There may be financial penalties if you wish to repay or end the mortgage plan early.
  • A Lifetime mortgage loan amount increases with compounded interest.
Various Ways a Will Can Be Destroyed

Pros And Cons Of Home Reversion Plans

Pros of a home reversion plan

  • You’ll receive money to pay for your care and living costs.
  • You get to stay in your own home for the rest of your life, or until you have to move permanently into care.
  • Equity-release schemes can help to reduce your Inheritance Tax liability.
  • You can sell only part of your property, leaving the rest towards your inheritance.
  • You won’t have to go through the process of moving home.
  • The equity released on your main property is tax free.

Cons of a home reversion plan

  • You’ll receive considerably less than the full market value for your property.
  • You’re no longer the sole owner of your home.
  • It might affect your entitlement to benefits
  • The inheritance you pass on to your beneficiaries will be substantially reduced and won’t include your home itself.
  • If you end a plan early, you would need to buy back the share you sold at full market value which could be a lot more than you sold it for.
  • A home reversion scheme could also be poor value if you die shortly after taking it out
  • Plans can be inflexible if your circumstances change
  • Lenders will expect you to keep your home in good condition
Pros And Cons Of Home Reversion Plans

How much equity can I release from my home?

The amount you can release from the value of your home depends on a number of factors including:

  • Your age
  • The value of your property
  • Your health (some lenders offer larger sums to those with certain health or lifestyle conditions)
  • The amount of any outstanding mortgage or debt you have

Most lifetime mortgage equity release tends to be for between £10,000 – £100,000.

How much equity can I release from my home?

Services also offered in Residential Property

Lease Extension

If you own a flat with a long lease you need to be aware of the remaining term of years left on the lease. Collective enfranchisement is the process by which a group of leaseholders in a block apply to purchase the freehold.

Conveyancing

Conveyancing is the legal process of transferring property ownership from one person to another, encompassing tasks such as property searches, document preparation, and financial transactions.

Islamic Finance Mortgages

Islamic finance is designed to help people purchase homes in the UK in a manner compliant with Islamic law and offers an alternative to the conventional interest-bearing mortgages in the UK market.

Equity Transfer

You might arrange a transfer of equity to add a spouse to your property title or may remove a co-owner if you are buying out that co-owner’s share.

Shared Ownership

Shared ownership is a home ownership scheme making it easier for first time buyers to buy a property.

Right to Buy

The Right to Buy scheme allows most council tenants to buy their council home at a discount.

Remortgaging

To remortgage a property is to look to move one mortgage deal to another to be secured against the same property.

Declaration of Trust

A Declaration of Trust is used to remove any uncertainty as to what will happen to each person's financial investment in a property.

Conveyancing Fees Calculator

To be provided with a tailor-made, instant estimate please use our conveyancing fee calculator

Frequently asked questions

It is essential that you receive independent legal advice as part of any equity release.

We provide:

  • Detailed analysis of the equity lease mortgage offer
  • Advice on other alternatives
  • An explanation of equity release consequences
  • A face to face discussion

We rely upon you giving us complete and timely instructions and also to provide us with all the necessary and relevant documents. We correspond with a number of institutions, all of whom may respond with greater or lesser efficiency. Delays by third parties such as these can mean that time scales will vary. We would expect that a simple matter would be completed within one month following receipt of the papers from the lender whilst more complex matters will take longer. If you require your matter to be expedited (completed within 14 days of receipt of the papers from the lender) we do offer an Expedition Service and an expedition fee will be charged. We will endeavour to provide up to date information as to timing throughout the course of the matter.

Equity release is a way to unlock the value of your home. If you're aged 55 or over you can take out cash, tax-free.

Those that require additional cash, have their own home and are aged 55 and over.

Call us now for residential property support

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Residential Property Team

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Paul Fursman

Paul qualified as a solicitor in 2010 and specialises in Residential Property matters.

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Vernon Sellahewa

Vernon joined the Residential Property team at Mullis & Peake in December 2022.
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