If you've reached retirement and your pension pot isn't providing the level of income you require to fund your lifestyle, or you need to access funds to cover at-home care, equity release could be an option for you.
This is a process that allows you to release money from property you own and continue to live in it. You can draw a lump sum of cash to spend as you wish-maybe on essential home improvements-or use it to form regular payments to add to your income. Or even choose a combination of the two.
If you have decided this is something you are interested in, it helps to understand the process. Firstly, you should set up a meeting with an expert equity release adviser who will be able to provide information on whether this is a viable option in your circumstances. There are criteria that need to be satisfied such as age, level of health, and whether you own your home outright. Your adviser will be able to inform you if this is the best possible route to take.
If your home is jointly owned you will need to apply together. The plan will take into account the age of the youngest borrower.
Choosing an equity release expert
When choosing your equity release provider ensure the company or individual is approved by the Equity Release Council and regulated by the Financial Services Authority (FSA). This provides peace of mind that you are protected by the â€˜no negative equity policy', which guarantees you will never owe more than your home is worth. These bodies also enable you to remain in your own home for as long as you choose-usually until you and your partner pass away or go into long-term care. You will also be able to move house if you need to, based on specific criteria.
What happens next?
You'll be involved in meetings that provide you with details of the plan and set out the costs involved in the scheme. It is not uncommon for applicants to choose to involve their families in these meetings, if desired. You'll then complete an application form.
Just like when you buy a property you will require a solicitor. Making sure your solicitor is experienced in the field of equity release will help the process move smoothly and may help keep costs down. Your equity release provider may recommend solicitors they regularly work with.
A surveyor will visit your home to procure a valuation of the property and send an offer letter, dictating what your property is deemed to be worth. Once you are happy with the valuation you can accept it. Legal checks will be carried out with regards to your property, before cash is released and transferred.
The process usually takes somewhere in the region of eight to 12 weeks to complete, from application to receipt of your funds.
If equity release is something you are considering, don't be afraid to set up an initial meeting to ask any questions. This will allow you to explore the possibility and make an informed decision.