What is the process of equity release?
The process of equity release normally involves five main stages and can take around eight weeks to complete from making the application to receiving your money. Timescales can vary depending on the type of equity release scheme you choose, whether it's the lifetime mortgage or the home reversion product.
What is equity release and who can benefit from equity release schemes?
As long as you are aged at least 55, own your home and it is worth more than £70,000, equity release lets you access tax-free cash from the value of your home.
What are the types of equity release options?
A lifetime mortgage: The application process for this usually takes between four to six weeks. This type of equity release scheme may or may not involve making regular payments depending on the type of product you choose. Interest is made monthly or annually and the loan is paid back by the borrower when you die or if you go into long-term care.
Home reversion: This alternative equity release plan means the provider buys all or a share of your property in return for a lump sum or a regular income. As with the lifetime mortgage scheme, you have the right to live in the property until you die or go into long-term care. You will have to maintain and insure the property while you are living in it. The provider will then receive their share of the property sale based on the agreement you have made. As long as the title deeds on your house are clear, applying for home reversion can take between six to eight weeks.
What are the main stages of equity release?
- Financial advice: It's absolutely necessary to get advice from an independent mortgage broker or financial adviser who specialises in equity release. It will also be important to stay in contact with them throughout the process. They will consider a number of things including your lifestyle, age, general health, and other sources of income when working out whether you will be eligible to apply for equity release.
- Choosing the right lender and submitting your application: The application must be completed with your mortgage broker or independent financial adviser. At the application stage, you will normally pay a valuation fee to your chosen lender. It is important that you choose a trusted lender who is a member of the Equity Release Council. Once the application is completed, your lender will go through a credit ID and title deed check before they contact a qualified surveyor.
- Getting a valuation on your home: Once the application has been received by the lender, they will get a basic valuation in order to establish a current market value which you will usually pay for, although some lenders offer free valuations.
- Choosing a solicitor: You should choose a solicitor who has experience in the equity release process. It's a good idea to do this when you submit your application so there's no delay in getting the legal process started.
- Completing and receiving your money: When all the legal checks have been completed, your solicitor will set a completion date. On this date, the lender will release the agreed funds to your designated bank account.
What are the costs associated with equity release?
There will be legal costs that are payable to your solicitor and either a percentage of your loan amount or a flat fixed fee payable to the broker who has arranged the equity release scheme for you. These costs are normally deducted from the amount that you have borrowed. These fees are in addition to the application fee paid to the lender at the beginning of the process and those paid to the surveyor unless there's a free valuation. Providing there are no unforeseen hiccups, the whole process will usually take no more than eight weeks.
How Can GloverPriest Help?
At GloverPriest, we provide friendly and transparent legal advice. If you would like further advice on equity release, please don’t hesitate to speak to one of our expert lawyers today. Complete our enquiry form.