If circumstances change
What happens if I have an equity release plan, and need to move into long-term care?
Your equity release plan is designed to enable you to stay living in your home until you either die, or become unable to continue living there. If you need to move into long-term care, and don’t have a spouse or partner who is still entitled to live in the property, it will be sold and the amount you borrowed, plus interest, will be paid back to your equity release provider. In these circumstances you will not have to pay any Early Repayment Charges, which can sometimes be payable if you decide to re-arrange your plan with another provider. Your equity release contract will explain how much time will be allowed for you or those acting on your behalf to sell your property. The time allowed is typically between 6 months and 1 year.
You might find that you wish to move in with a member of your family, as an alternative to going to live in a nursing home. Obviously this will depend on what sort of support and care you might need at that stage, and what options are open to you. You should check carefully how your proposed equity release provider would respond in this situation as some will only allow you to move in with a relative if your medical needs require this. Others may not be so specific. If you think it might become a relevant issue at some point in the future, make sure you ask the question and get a clear answer.
If the property is being sold after your death, your beneficiaries/executors of your Will will be in charge of selling the property on the open market – that is, via an Estate Agent, so that it is sold for what is known as its “market value.”
If you are still alive when the property is sold, you may have appointed an Attorney to handle your affairs, in which case he or she can arrange the sale. If not, most equity release providers include a very specific Power of Attorney in their contract terms and conditions, which allows them to take over a sale if progress is not being made by the borrower or his/her personal representatives (who may also be executors if the borrower has died). This power is completely standard in ALL residential mortgages and is not peculiar to equity release: in effect it makes sure that the provider/lender is able to sell your property and recover the debt owed to it.
You or your estate will be responsible for paying all the costs of the sale, including solicitors’ fees. Some providers may also charge an administration fee for removing their charge against the property, which is registered at the Land Registry.
If I take out an equity release plan, will I be able to move to another property?
Yes: equity release plans which comply with our full product standards give you the right to move to a “suitable alternative property”. This means a property which your provider would accept if it were setting up a plan for a new customer. There are some properties which providers would not be able to accept – and this is usually because there would be restrictions on their ability to sell the property in the open market when your plan comes to an end. So, for instance, homes which are built in retirement complexes are not generally acceptable, because the provider would not be able to sell them in the open market.
There may be other restrictions on the types of property that will be acceptable to providers – such as the type of construction. See question on “Why are some types of property not acceptable to equity release providers?”