How can equity release affect my family

What if I want somebody to live with me but they are not party to the equity release?

Most lenders will agree that you can share your home with a partner/son/daughter/carer or other relative but will almost always insist that the occupier signs a waiver, confirming that they will move out as soon as you are no longer living at the property (usually because you have died or moved into long-term care).  Many lenders also insist that the occupier has independent legal advice, which will need to be with a different solicitor to the one that you have instructed to act for you.  Please be aware that this will add to your legal fees, so we recommend that you shop around to obtain a quote.

When I die, if my property is worth less than I borrowed, can my family still inherit it?

Your family will not automatically inherit the property following your death, since your equity release provider will be entitled to recover as much as possible of the amount they had lent you (known as a 1st charge), and this often means that the property will have to be sold.  If your family wished to keep the property, they would have to discuss with your equity release provider whether it might be possible for them to pay off the remaining debt.

What happens to my partner if I die?

If your plan is in joint names, then your partner will be able to continue living in the property under the same terms.  If it is in your name only, then unless the mortgage can be repaid in full the property will have to be sold and your partner will have to find somewhere else to live.  It is normally a requirement that where the borrower clearly has a spouse or partner, the plan is written in joint names from the outset to make sure that both individuals have the right to remain in the property until they die or move out.

If you marry after you have taken out a plan, or if someone comes to live with you as your partner, then you must tell your provider.  It may not be possible to add your new spouse or partner to your plan, in which case they will not necessarily have the right to continue living in the property if you die or move into long term care.

What happens if I live with someone else?

If you are married, in a civil partnership or living with someone else as a partner and you are both eligible by age, you can take out a joint equity release plan. Your spouse or partner will then have the right to live in the property for as long as they wish, should you die or move into long term care. If you have a friend or tenant living in your home the provider will want to make sure that they have no rights to continue to live there when you die or move out, as that is the point at which the loan made to you will have to be repaid, through the selling of the property.

What impact will it have on my family?

Taking out an equity release plan could leave your family with little or nothing to inherit from your property.  You need to be comfortable with this possible outcome, and may wish to discuss it with them before committing yourself. You may also want to consider including your family in any discussions you have with your financial adviser or your solicitor.

You may be considering to release equity from your home to help younger family members get on to the property ladder or pay for school or university fees etc.  If this is the case, you need to consider the implications of releasing the equity now, as it will not be available later on should you need it for other purposes.

You can also get information from individual Equity Release Council members or from other qualified advisory firms.

Could this type of scheme help me reduce any inheritance tax?

The use of an equity release scheme will reduce the value of your estate. You should speak to your financial adviser if you are considering using equity release for this purpose.