Equity Release

Equity release is a process that allows you to use some of the value in your property for use during your lifetime. A lending company will enter into an agreement to pay you a fixed sum of money, which you can use for living expenses, additions to your home, a holiday or any other need that you wish. In exchange, you will grant the lender a legal charge over your home, which will be entered onto your property's record at HM Land Registry. The amount they have lent to you, plus an agreed interest charge, will then have to be repaid upon your death.

The benefit of this type of arrangement, called a 'Lifetime Mortgage' is that you do not have to make any repayments during your lifetime, the payment is taken care of via the value in your property, which is usually sold to repay the lender, and the remainder of the value going to those friends and family members named in your will. A similar scheme, called a 'Home Reversion Plan' involves your home being technically 'sold' to the lender, with you being granted a lifetime lease to live in the property rent free, or at very low rent, with the full value of the property being given to you as a lump sum. A solicitor can advise you on the legal implications of any arrangement that you make regarding your property, and the effect this will have on those named in your estate. Some forms of plan actually require for a solicitor to advise you as part of the legal formalities involved.