Equity release – what should you know?

Coodes is the only legal firm in Cornwall to be members of the Equity Release Council. Solicitor Heidi Start looks at what you need to know about equity release…

What is Equity Release?

Equity release allows homeowners to access money tied up in their property, on a tax-free basis, while they remain in their own home. It provides people over the age of 55 with the opportunity to use what is often their primary asset to obtain a lump sum or income stream.

The amount that can be released is based on the age of the borrower and the value of the property. One of the most popular forms of equity release is a lifetime mortgage, which enables the home owner to borrow money in the form of a loan secured against their property without the need to make monthly repayments.

As equity release increases in popularity, there are more lenders offering a wider choice of products to those who choose this route, to meet this greater demand.

Reasons for taking equity release

There are many reasons why people consider equity release. Equity release can provide homeowners with more financial freedom in retirement – for example, someone facing a pension shortfall could supplement their income or the funds borrowed could help fund an unexpected expense.

Other popular reasons people have for considering equity release include helping a family member financially, to maintain their own standard of living or take that trip of a lifetime that had always been planned.

With the current conditions in the housing market and issues with stock availability, some people are choosing to stay in their home using equity release funds to carry out essential repairs taking away the need to move.

Borrowers view equity release as a convenient way to access their assets which are otherwise tied up in their property.

Regulation of the market

Equity release has previously attracted criticism and had a bad reputation, however, regulation of the market has much improved.

The Equity Release Council is the body that regulates this area of the financial services market and is involved in governmental decision-making relating to products of this nature. Members of the organisation have access to up-to-date information, developments, and training in this specialised area.

Coodes is the only legal firm in Cornwall to be members of the Equity Release Council, providing our clients with the reassurance that we are experts in this field and that they can depend on us to assist them on their equity release journey.

Financial advisers

It is always recommended that clients should seek the advice of an independent financial adviser who will advise them which product best suits their needs. An independent adviser will look at the market as a whole to help the client select the best option.

Our role at Coodes

Once the choice is made that equity release is the right option, the borrower will need to appoint a lawyer to advise them on the legal aspects of taking out the loan.

That is where we can help – the offer is produced by the lender and sent to us by the lender’s solicitor. We investigate the terms of the offer and review the documents to be completed. Our role is to explain the legal implications of the loan as equity release is a long-term commitment.

Once we have reviewed the paperwork, a report to our client is prepared explaining the terms and conditions of the offer, our clients are then invited to make an appointment to meet their lawyer face to face to discuss their matter. This meeting gives our client the opportunity to ask us any questions they may have, and their lawyer will explain the terms of the loan and the lenders requirements.

As experts in equity release, our role is to make sure that our clients understand the legal aspect of the loan. We offer advice regarding the immediate and long-term effects of the loan and guide our clients through the paperwork that needs to be completed and submitted to the lender to finalise the mortgage.

Once the necessary administration is completed and the documents have been submitted, we will attend to any further requirements that the lender may have. There are lots of documents involved with equity release which can feel daunting, but we are here to guide our clients through the process to the successful completion of the loan.

For more information about equity release and the legal requirements, please call us on 0800 328 3282 or use the contact us form.