Equity Release - can I buy back the equity?

shazzy67

Hello All

My Great Aunt and Uncle have got into an equity release programme.

I woould like to purchase the property after their death and wondered could I purchase the equity release part now.

They are fully aware of my idea and we're currently waiting for the company to get back to us.

Just wondered is it possible for me to do this and also any idea on what the cost would be?

I'm guessing they have @£40,000 remaining in equity in the property.

Thanks

Shazzy

holly_hobby

This sounds like a home reversion scheme (% of property equity taken by provider in exchange for an initial capital sum).

Purchasing back the equity for your aunt and uncle, is effectively purchasing the lenders security. and will actually involve fully redeeming (ending the) mge. Be prepared for hefty penalties, as such schemes aren't tailored to early redemption, but are designed to be redeemed on 2nd death or entry into long term care.

If the lender agrees their transfer of the equity(TOE) to you (which isn't gted as you aren't party to the current mge arrangement), I assume you are purchasing for cash ?

If a mortgage is reqd, you will have issues re your aunt and uncle's age and max term (as being on the deeds they will also have to be joint mortgage applicants), OR if they also transfer their own element of remaining ownership (equity) from them to you (which will avoid the max term issue), the fact that they will (I'm guessing) remain resident post completion (ie no vacant completion available), is a real no-no for lenders, re the impact it has on any future possession order they seek (on mge default) - so there are several issues re any mge requirements you may have to fund this exercise.

As it stands, this is likely to become messy, especially if any agreed TOE from the lender to you, wouldn't be a cash transaction.

What you could consider is for your Aunt and Uncle, within their will and the current lenders permission, is to request you have first option of buying the property from their estate on 2nd death (or 2nd entry into longterm care). Of course at this time the current home reversion scheme will kick in, with a % of the sale price (equity) going to the provider under the agreed terms, as opposed to be included in the estate for division to the beneficiaries - but it is what it is I'm afraid.

I won't go any further into details, at the moment, save to say all parties need thorough financial and legal. advice re how you want to play this and how any future bequest within their wills, will both assist and meet your ownership requirements. I would also have a read through their Home Reversion mge T&Cs, just to familarise yourself on its workings and application, and come back here for further comment, as and when needed.

Hope this helps

Holly

Let_Us_See

Holly has quite succinctly summarised the position. However, start at the beginning and request a redemption statement from the current provider. Once this has been received, and you have decided in principle to continue, come back to us with the figures (redemption amount, property value, your income details, existing financial commitments (including mortgages), age, etc) and obtain more specific advice. Otherwise any advice at this stage is pure conjecture.