Personal equity release by friend

whitejohn

My partner and I would like to setup a personal equity release/home reversion or similar, on my property (flat). Will it be easy to get one drawn up by a solicitor or is there a better scheme?

The plan is that she lends me say £100K and I leave her the total property and contents valued at say £190K. I get to live in the flat until I die or move in to a nursing home.

It suits us both as we want to go off travelling in our retirement and she has more cash than me. In return, I have no family and I'm prepared to leave the property to her. (and probably other cash too).

We are approaching 70 and both think it's a good deal. There are many other advantages for us, too many to mention.

We would consider other schemes like a house share or loan secured on the property but don't think they would be as good. Stamp duty and lease issues could be a problem. My partner rents her house from family at present and may want to buy a property later. When the equity release is setup, who actually owns the property? Any other things to consider?

p00hsticks

If I were your partner I'd want an appropriate proportion of the property transferred into my name at the point at which I gave you £100k, rather than just a promise that you'd leave it to me when you die (presumably in a will whcih you could subsequently alter at any later point).



I believe that's how true equity release would work.

tacpot12

You definitely need to consult a solicitor in order to set this up.

You might be better off selling them half the house and leaving them your share of the property in your will. A solicitor will know all the options and be able to advise you on the best one. They might insist that two separate solicitors represent each of you to avoid a conflict of interest. While this might sound expensive, both of you need to consider the pros and cons of each possible arrangement, from your own perspectives.

whitejohn

p00hsticks wrote: »

If I were your partner I'd want an appropriate proportion of the property transferred into my name at the point at which I gave you £100k, rather than just a promise that you'd leave it to me when you die (presumably in a will whcih you could subsequently alter at any later point).

It would be a legal contract drawn up by a solicitor and nothing to do with a will that can be changed. I would also need to make sure I could not be evicted at any point. I'm happy to sell a share and do it that way but my partner wants to avoid owning 2 properties if possible.

whitejohn

tacpot12 wrote: »

You definitely need to consult a solicitor in order to set this up.

You might be better off selling them half the house and leaving them your share of the property in your will. A solicitor will know all the options and be able to advise you on the best one. They might insist that two separate solicitors represent each of you to avoid a conflict of interest.

We thought maybe best to seek financial advice on the best scheme first and then have the solicitor draw up the contract. Selling a half share may well be the way to go except for the stamp duty if my partner buys another house.

Pixie5740

Equity release is essentially a loan so your partner could place a charge against the property when she lends you the £100k. That wouldn't make her a legal owner of the property but would protect her money. I'm not quite sure of the ins and outs of her becoming a beneficial owner though since she is lending you the money to potentially inherit the property further down the line.

whitejohn

Pixie5740 wrote: »

Equity release is essentially a loan so your partner could place a charge against the property when she lends you the £100k. That wouldn't make her a legal owner of the property but would protect her money. I'm not quite sure of the ins and outs of her becoming a beneficial owner though since she is lending you the money to potentially inherit the property further down the line.

That sounds like the simplest solution all round.
I'm sure a solicitor could arrange something on the lines that
The loan is re-payable on death of the borrower.
No interest is payable on the loan but as compensation the lender becomes the legal owner of the property on death of the borrower.