Equity Release FAQ

Equity Release - Frequently Asked Questions

1. What is Equity Release?

Equity Release is the process that allows you to release funds from your property in order to generate income whilst you continue to live there.

2. Am I eligible to take out an Equity Release plan?

To take out an Equity Release plan, you must be:
• Aged 55 – 95 (if it is a joint application, both people must be in this age range)
• Own a property worth £50,000 or over
• Live in England and Wales.

3. Once approved, how long does it take for the funds to be released?

Every case is different and your adviser will keep you informed at each stage of the process. On average it can take between four and eight weeks from the date of your application.

4. When do I have to pay back the Equity Release loan?

Equity Release plans expire upon death, or if you have had to leave the property earlier than planned, for example you may need to be placed into a residential care home.

5. Can I repay the Equity Release loan early?

Yes. However, exit penalties are often included within Equity Release products so it is important to note any potential financial implications should you decide to leave the scheme early.

6. Can I borrow more at a later date?

This will depend on a number of factors including any existing mortgages, property value and age. If you feel that you may need additional equity in the future discuss this with your adviser before agreeing to a scheme.

7. What happens if the property value has reduced?

If the Equity Release plan you take out is offered by a member of The Equity Release Council (ERC) then it will have a ‘no negative equity’ guarantee. This means that even if the value of your property falls below the amount owed, you will never owe more than the value of your property.

8. Does an Equity Release plan prevent me from moving to a new property?

No, an Equity Release plan does not stop you from moving home. However, the process can be complex. In order to transfer the loan there will be certain conditions and criteria which your new property must satisfy. For example, if your new property costs less then you may have to repay some of the loan.

9. What happens if my health deteriorates?

If your health deteriorates and affects your ability to make decisions it is extremely beneficial to appoint an individual of your choosing with the legal authority to look after specific aspects of your health and welfare or financial affairs should you lose capacity to do so.

A Lasting Powers of Attorney (LPA) is an important legal document that provides you with the legal means to do this. There is a misconception that your spouse or adult child automatically has the right to manage your affairs, which isn’t the case.

An LPA can allow your attorney to make further withdrawals from your existing plan, or even take out a further plan to support your continued occupation of your home. It can help to ensure that your wishes regarding your continued welfare and affairs are carried out as you intended, providing you with peace of mind.

With Kirwans, you have access to a specialist team that will guide you through the complexities to help ensure that you have the right LPA in place for your circumstances. We produce and register the document for you.

10. If I go into care can my partner still live in the house?

Yes, if you have taken out a joint plan.

Important Notice: The information in this guide is based upon current law of England and Wales, which is subject to change. We cannot accept responsibility for any liability that may arise as a result of any action taken or not taken as a result of this information. This guide does not constitute legal advice. To be fully aware of the implications it is important to seek advice from a qualified Solicitor. 

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