Equity Release guide discussion

gdw123

I posted in another forum and someone guided me here. I have and issue which I do not know where to start on solving.
 
My wife is Bipolar and is living in an assisted home at present. We do not want to divorce or legally separate. I am on Universal Credit as my business dropped 90% due to Covid.
I am living in the home where I was looking after my mother as a carer until she died. I have inherited the home as the sole beneficiary in her will.  
I was looking at Equity release or a lifetime mortgage on the property to settle the legal fees and debts and carry on living at the home. I went through a vetting process which stopped when I said we were living separately. Without the extra funds I will have no way of living in the property. My wife and I are not looking to formally separate as she may get better. I have a joint bank account with her which she still uses. I have no problem with  her eventually returning. In the US it is possible to have a status of married but living in two locations but not here. Is there any source to discuss this without gigantic legal fees? 

Nick_Lovell

@gdw123 - the issue is that most lenders will want your wife resident in the property, and the issue is that she would need to become a joint owner to satisfy their criteria. Lenders are risk averse to lending where a married couple are not joint owners, as if you were to pass away or go into long term care, she has no right to live in the property and this puts her at risk. There are 2 lenders who will consider on a case by case basis the option of a sole borrower when married, but all others will definitely not entertain this. I would recommend she becomes a joint owner as that will certainly assist and open up the options with lenders. However, I would have to understand better their view on her condition and how they would view this, with her not resident in the property as well I'm not sure you will find a lender willing to underwrite this.

Nick_Lovell

@gdw123 I've spoken to a lender who states as long as the deeds are in your sole name - Your wife would need to sign a waiver of occupancy and get independent legal advice. If she is unable to sign on her own behalf then a power of attorney would need to be in place, you cannot act as the attorney though in the interests of conflict. Hope this helps, message me if I can help further.

DairyQueen

Is equity release possible for a married couple who own their home 50/50 as tenants in common?

We have no need to EQ anytime soon but are considering future options. The TiC arrangement is required to optimise inheritance (and IHT) as I am childless whilst OH has two adult daughters from a previous marriage. Our wills are written such that on first death the survivor would inherit a lifetime interest in the deceased's 50% share of our home (or its replacement).

Nick_Lovell

@DairyQueen - it is acceptable to have a tenants in common arrangement for equity release. The only caveat would be if there is a Trust in place this would need to be broken. But a standard TIC arrangement is not an issue.

Watson

A friend (in her mid-sixties) is considering using equity release to pay off an existing mortgage and also provide a much-needed lump sum for house improvements.  She's looked into the plusses and minuses but as someone with no direct family isn't too concerned about eroding the eventual sale value of her present property. 

She is, though, undecided about whether to approach one of the currently high-profile equity release companies or consult an independent financial advisor - this latter being something she's done in the past with less than happy results.  Any thoughts and  experiences in this area would be extremely valuable.  Thanks.

Nick_Lovell

@Watson - the main criteria is to always sure the adviser is a member of the equity release council, as they will abide by their code of conduct. As for a large company vs a smaller business - with a large company you can often engage with an inexperienced adviser, as they do have a high turnover of advisers, although they will be closely monitored around their advice. You can also approach what appears to be 'large' businesses only to find they are a white label version of one of the big 3. I would opt for a medium sized business and engage with an experienced adviser - they should not charge any fees upfront and you should be able to get an initial fee free consultation. Don't be tempted by 'free advice' as this means you are just being offered one lenders products and could cost you more in terms of the overall borrowing. I've sent you a link that might help.

Watson

Nick, belated thanks for your very helpful answer and the link, both of which I'll pass on to my friend

AJW62

Hallo forumites, hope someone can offer advice.  My friend and I bought our home together many years ago, as we were both single at the time and neither could afford to buy separately - we are tenants in common, 50/50, and the mortgage is paid off.  I now want to move out and buy a home with my partner, but my friend can’t afford to buy me out (the property is in the London area and worth over £400k).   I want her to be able to stay in the property- if we sold, she wouldn’t be able to afford anywhere local on her own (we live in her home town where all her friends and family are based).  

Would equity release be a feasible way of getting my share of the property’s value?  We’re both around 60. Neither of us have any dependents, so inheritance isn’t an issue.  But would this method release 50% of the property’s value?  And should we take it out together, or would she be able to take it out herself (if I took the money, I’d obviously transfer my half of the property to her, but then I guess she’d have to pay stamp duty).  Can anybody think of any other options that might be available?  I appreciate your thoughts, thanks.

Savvy_Sue

Don't know about equity release, but is one option for you to retain an interest?

We bought outright with a friend: initially they owned c. 80%. When they wanted to move, we took out a mortgage for as much as we could afford: they still own 12.5%. That's recorded in a deed of trust.

It's potentially messy, you have to trust each other, but it works for us.