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When you die your equity release plan will be repaid from the sale of your property or other means such as by an investment. Any money that is left over from the property sale will be distributed as outlined in your will.
The lender will request a copy of the death certificate and then you’ll usually have around 12 months after death to repay the loan, this should allow enough time for the property to be prepared for sale and sold. They can be flexible with this also in a slow housing market for example.
If your beneficiaries wish to keep hold of your property, they are able to repay the equity release plan in other ways, examples include a new buy to let mortgage in their name, an investment, or cash in the bank etc.
How Does Equity Release Work If I Die?
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No Negative Equity Guarantee
One of the key safeguards relating to equity release comes with our Equity Release Council membership. It’s the no negative equity guarantee. We get a lot of clients concerned about what would happen if the loan and the interest accrued becomes more than the value of the house.
So, for example, if property prices crashed, the no negative equity guarantee essentially means that as long as the property was still the client’s main residence, and that it’s sold as a fair market value the lender will not come to the deceased’s estate or beneficiaries and look for any further money.
With all the plans that we recommend, you’ll have peace of mind that you’re covered by the no negative equity guarantee.
What happens if I move into long-term care?
If independent living gets too much and you move into long-term care, it’ll be considered that you will not be returning to live in your property. Your equity release (single name) plan will come to an end, and the lender will need to be repaid.
If the property is sold to repay the lender, any surplus may be used to fund any ongoing care costs. This could be the case for private care, but also state-funded care.
If your equity release plan is in joint names and you need to move into long-term care, your plan will continue until your spouse/partner either dies or also moves into long-term care. Your provider will still need to be notified of the changes.
Using Equity Release to Fund My Long-Term Care
This is one of the main reasons our clients choose to release equity.
If you require long-term care but wish to remain at home, you can use the proceeds of your equity release plan to help pay for carers and assisted living improvements such as door ramps, walk-in shower, downstairs bedroom/toilet, stair lift, a garden re-design etc.
These changes can run into tens of thousands of pounds along with carers fees.
If you are choosing equity release to fund long term care, it’s important to run through appropriate costings with your advisor, we’ll help you all the way. It will save you paying lots of unnecessary interest by choosing to release the money in smaller chunks as and when you need it rather than a lump sum.
Your advisor will still need to apply for the total amount you require upfront, however, you are then able to draw down the money as and when you need it. You’ll only start to pay interest when the money is drawn down.
What about my surviving spouse/partner?
If your equity release mortgage is in joint names, your surviving partner can continue to live in the property until death or they move into long term care.
If your partner wishes to downsize, this maybe an option also. Equity release plans provide a lot of flexibility.
When it comes to equity release and lifetime mortgages, there is a lot of end-of-life situations and planning involved, however, it is a topic that is important to talk about and involve any family members also.
We’ll also talk about any legal documents that you can have drawn up such as a lasting power of attorney.
Seeking great advice is vital here, we see lots of companies that only offer a very limited equity release advice offering. Here, we are proud to be independent.
Can I repay my equity release plan early?
Yes, you can. However, there will be early repayment charges, usually within the first 10 years of your plan.
An equity release lifetime mortgage should always be recommended by an advisor as a last resort, all other forms of later life mortgage should have been considered and discounted.
It’s important to seek great equity release advice when considering your options. Your later life mortgage advisor will run through all your options as part of your free, no-obligation consultation.
Book a Free, No-Obligation Consultation!
If you feel ready to take the next step with us, we’d love to hear from you. You can telephone or book online to arrange a free, no-obligation consultation where we can discuss your later life mortgage options.
We’ll answer all your questions and recommend a way forward. We don’t need anything in the call other than your ages and your address.
Evening calls are available to fit around any work or children’s commitments also.
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Involving Your Family
Equity release is a big decision; therefore, we encourage family members to be involved in the conversations from the get-go. Family members can be a huge help when going through the application process and always have lots of important questions.
Involving family members in the process will give you peace of mind that you have chosen the right company and help with the understanding of some of the pros and cons of the plan.
Your family members will, most probably, have their own questions also which we’ll be more than happy to answer.
With our video software, we can add multiple family members to the calls and discussions easily.
To understand the features and risks, ask for a personalised illustration. Equity Release may come in the form of a lifetime mortgage or home reversion plan.
A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means tested benefits. The loan plus accrued interest will repayable upon death or moving into long term care.
A home reversion plan involves selling all or part of your home to a plan provider in exchange for a tax-free lump sum.
