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What is equity Release?

Many people approaching, or already in, retirement can struggle to make ends meet due to poor pension returns and the increasing cost of living. As a result Equity Release Plans are becoming very popular as they enable homeowners to access income or capital from their home without having to move.  However, the legal and financial issues involved are significant and it is vital they are fully understood before proceeding.

There are two main schemes available – Home Reversion Plans and Lifetime Mortgages:

Home Reversion Plan

The Home Reversion Plan requires the property to be sold to a company for either a lump sum or a regular income and the home owner is also given a right to occupy the property on a similar basis to a Lease.

Life Time Mortgage

With a Lifetime Mortgage the homeowner re-mortgages their property and releases capital from the property which can be taken either as a lump sum or as income. The loan does not usually have to be repaid until the homeowner has died or moved into long term care.

What Type of Equity Release Plan Should I choose?

This really depends on your age and financial circumstances and the type of plans on offer at the time. They can vary tremendously just as traditional mortgages vary with different lenders. It is essential that you understand the financial implications. These could affect entitlement to benefits or there may repayment penalties, or interest increase after an introductory low rate. This should all be fully explained to you by the lender and financial advisor. Therefore it is vital that the contract is independently checked by your solicitor so you can be sure of the terms you are agreeing to.

You should bear in mind that Equity Release is not for everyone and you will need to make an informed decision as to whether this is something with which you should proceed. Newnham & Jordan Solicitors are experienced property lawyers and can help you by; making sure the contract is suitable for you, and carry out the required legal processes involved. We offer a “no obligation” initial consultation where we would be happy to run through the process and legal implications with you.  We will also provide you with an indication of the anticipated legal costs.

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