Taking out equity release
Where do I start, how do I take out an equity release product?
How do I take out an equity release product?
First of all, and perhaps most importantly, you should talk to a professional financial adviser. Equity release may not be right for everyone. It may affect your entitlement to state benefits and it will reduce the value of your estate.
If you don't have an adviser at the moment, don't worry, you'll find impartial listings of professional advisers in your area on thepfs.org or unbiased.co.uk. Make sure you check carefully as to whether or not the adviser you're seeing has the specialist equity release qualifications.
Alternatively, HUB Financial Solutions - part of the Just Group - offers an equity release advice service that could help you decide if equity release is right for you.
What is the process?
Once you have decided that you want to find out more about an equity release product, you should set up a meeting with a financial adviser. They will review your personal circumstances to see if an equity release product is suitable for you.
If equity release is appropriate for your needs, your financial adviser will provide you with a recommendation of the type of equity release product that best suits your requirements – either a lifetime mortgage or a home reversion plan.
They will also provide you with what's called a Personal Key Facts Illustration (as indicated by the 'Key Facts Logo'). This summarises all the important details of the product that you need to know about and understand, and it gives you a clear understanding of the costs involved.
The process for taking out both products is similar, but not quite the same.
For a lifetime mortgage:
If you decide to proceed with your financial adviser's recommendation they will complete an application form with you. They will then send the form together with any fees to the chosen provider. It is recommended that before choosing a product you consider if it meets The Equity Release Council standards.
The provider will instruct a surveyor who is qualified with the Royal Institute of Chartered Surveyors (RICS) to come out and visit your home and produce a valuation. The valuation report is for mortgage purposes only.
Once the survey is complete and the amount you can borrow has been confirmed, you and your solicitor will receive an offer letter. Your solicitor will talk you through the offer. When you are happy with it, you and your solicitor sign the acceptance form. This shows that you understand the features and risks of the mortgage. Your solicitor will also need to sign the Equity Release Council Solicitors Certificate, to confirm they have discussed key points with you and you understand the nature of the contract.
It is wise to make sure the solicitor you choose is experienced in equity release as this will keep the costs to a minimum and ensure a smooth process. Many product providers have approved panels of solicitors that you can work from, or you can go to thepfs.org or unbiased.co.uk to find one.
Your provider will then carry out some legal checks in relation to the title of your property. Once this is completed the cash is released to your solicitor who will arrange for the funds to be transferred to you.
For a home reversion plan:
Again, your financial adviser will complete the application form with you and send the form with any relevant fees to the reversion provider.
As you will be selling a portion of your home, the provider will instruct a surveyor who is qualified with the Royal Institute of Chartered Surveyors (RICS) to come out and visit your home and produce a valuation. A copy of the report may be sent to you and/or your solicitor, and you may even wish to get your own independent valuation conducted. This won't necessarily affect the amount the reversion provider will offer you, but you will have your own independent view of the value of your property.
Once the survey(s) are complete, the reversion provider will confirm how much of the property they wish to purchase in exchange for your desired lump sum. This will be in the form of an offer letter. Your solicitor will talk you through the offer, and if you are happy with what they are suggesting then your solicitor will sign the acceptance form. They will also need to supply copies of the deeds to your home to the reversion company, as you will now no longer be the sole owner.
Once the necessary legal paperwork has been completed the cash is released to your solicitor who will arrange for the funds to be transferred to you.