Equity Release - what happens next

fil212

My father took out an equity release on their house a few years ago. Not great but he got a good income from it for 20 odd years. He just passed away leaving my mother in the house. We're planning what to do next which may involve her leaving the house.

My first questions: What if she moves into a care home and the house is left empty? Do we sell the house or does the equity release company?

Of course, I'll check this with the equity release company but I'm very keen to learn from anyone has had who's been a similar situation?

Any advice at all would be much appreciated. Thanks.

margaretclare

It depends whether it was in Dad's name alone or in both their names.

We did an equity release in 2003 and we have a guarantee that this property can remain ours to live in even if only one of us is still alive. We were both signatories to the deal and we put the property into joint names - it had been in my sole name up to then. Joint names means the survivor owns it 100%.

I don't think the equity release provider gets involved in the sale of a property, but obviously if it is no longer needed to live in then there's a debt which has to be paid off.

hethmar

You need to find all the paperwork about it. My old neighbours OH took out a policy years ago with Barclays. He died and then by the time neighbour died there wasnt a huge amount of equity left in the house for the beneficiaries as the interest had rolled up year after year.

margaretclare

hethmar wrote: »

You need to find all the paperwork about it. My old neighbours OH took out a policy years ago with Barclays. He died and then by the time neighbour died there wasnt a huge amount of equity left in the house for the beneficiaries as the interest had rolled up year after year.

That could be the case if the interest was fixed. Like any kind of mortgage, some people might have done it this way fearing that interest rates would go up again - those of us who lived through high interest rates in the previous decade might have feared this. We had a variable rate and, because interest rates have been so low for such a long time, ours hasn't rolled up to anything like the same extent. But yes, it depends on what it says in the original paperwork. There should have been annual statements setting out exactly what is still owing.

fil212

Thanks for everyone's comments, it's been very helpful.

So I have now found out that the equity release scheme that my father took part in is a reversion plan rather than a lifetime mortgage. They have been receiving a monthly income by selling part of the property to the equity release provider in return for a right to remain there rent free.

I'm still looking into the paperwork, but if anyone is still reading and has some experiences or words of advice on a reversion plan type of equity release scheme I'd be really grateful. I'm particulalry interested in what happens if the property is not occupied, say if my mum needs to go into a home. If this happens are we obliged to sell up?

cavework

If your Mum moves into a care home. 1st option is to sell the property and pay off the equity release that is owed,
2nd option,see if you can get a buy to let mortgage on the outstanding amount of the equity release.
If your parents had a tenancy in common agreement which gives you a 50% inheritance of the property after your father passed away ,your Mum has no asset that can be accessed by Social Services if you can pay off the equity release and refuse to sell.
50% of a house will not sell but be prepared for a fight