Considering Equity Release?

We at Kirkham Legal are receiving more and more enquiries these days about Equity Release Schemes especially from people considering their financial options as they approach retirement, or indeed, those who have already retired.

As with any financial product, there are pros and cons, which, together with the arrangement and legal fees involved, means that very careful consideration should be given before proceeding with them.

“We always advise our clients to consider all of their options, such as other forms of potential funding, to speak to their closest relatives or the people likely to be affected under the terms of their Will, and, importantly to speak to a properly qualified Financial Adviser who should be able to select the best product for them, taking into account their current financial position and their financial needs, and also advise them of the interest rate to be applied to the loan and the likely long term effect of the same upon the equity in their property. Once a client is satisfied with the advice we can then proceed to deal with the legal process to release the cash” says Robert Bouch, LLB Hons, Consultant Property Specialist.

“An Equity Release Scheme essentially allows a person to access the capital built up in their property without having to sell up or move out, so it is very attractive to older home owners in need of funds. There are currently 2 types of product, namely, a Lifetime Mortgage, and, what is known as a Home Reversion Scheme. Lifetime Mortgages are the most popular choice, and those taking them out, borrow a proportion of the value of their house with interest being charged on the amount, but without paying anything back until they die, sell or move out of the house (for example into a care home), whereupon the rolled up interest and the initial loan amount is repaid. A Home Reversion Scheme involves you selling a share of your house to the Product Provider for less than the market value of the property but with you having the right to remain in the house for the remainder of your life, and, upon your death or permanent move into a care home, the property is sold and the Product Provider gets their percentage share, at the full market value, back” explains Robert.

Lifetime Mortgages are generally available from age 55 onwards, but Home Reversion Schemes are only available to those aged 65 and above.

“It is important to remember that these deals should not be entered into lightly, as, once completed, people’s options to change the arrangement are severely limited purely by dint of their personal circumstances and age. This is why we at Kirkham Legal will always explain each and every clause of the agreement to you, to ensure that you know exactly what you are signing up for, and the future implications of the same” adds Robert.

If you have any enquiries about anything raised, then please do not hesitate to contact us on 0161 393 2299.