Equity Release and Pension Credit

Sea_Shell

stripling said:

You cannot have equity release under these circumstances. You have to own outright. You cannot have equity release on a half share. The equity release debt would be against the entire property thus compound interest, unless it was paid off, would eat the value of the entire property 'faster than the speed of light.' 

The smart thing to do would be to get B to sell his share to A at a token amount and for A to get a small equity release loan to pay B at the same time that there is a transfer of equity putting the entire property in A's name.

If A then wanted to pay the monthly interest like a mortgage, the property wouldn't lose value. The debt would be paid out of the eventual estate. 
If A didn't pay the interest she could continue living there for the rest of her life and probably forfeit the property in settlement from any estate. 

Or, having got the property into her name - A could sell, pay off the equity release debt and downsize. 

Ultimately, all these questions are for a professional financial advisor. 

I'm talking about a "normal" joint application, but where one party wouldn't get any of the money.

It's not an IFA question, it's a DWP question, in that specific aspect regards PC.

peb

One point, B wants the money but doesn't reside at the property.  So I don't think any ER company will accept this.  Secondly any monies raised would have to be for the benefit of both.  I can't see a Solicitor signing off on this scenario 

Sea_Shell

peb said:

One point, B wants the money but doesn't reside at the property.  So I don't think any ER company will accept this.  Secondly any monies raised would have to be for the benefit of both.  I can't see a Solicitor signing off on this scenario 

That's good to know.   

Does ER go through solicitors?

peb

Absolutely.  Each mortgagor (so both A and will be required to have either face to face or a telephone/zoom/teams call regarding the implications. 

Lenders are keen to avoid irresponsible lending claims.  I've not done any of these for some years and I don't know what companies still do them now.  

kaMelo

Sea_Shell said:

peb said:

One point, B wants the money but doesn't reside at the property.  So I don't think any ER company will accept this.  Secondly any monies raised would have to be for the benefit of both.  I can't see a Solicitor signing off on this scenario 

That's good to know.   

Does ER go through solicitors?

It's a non negotiable condition of equity release that all parties receive independent legal advice.
No equity release provider will sign off on the deal without documented proof that this advice has taken place.  This is to protect the company when the inevitable mis-selling complaints are made in the future.

I realise you're asking a very specific question regarding equity release and pension credit but in all honesty, it's a rather niche scenario you have described, as such I highly doubt there are any similar examples to reference and the best anyone here can offer is a good guess. For what it's worth this is my guess;

I imagine no equity release provider will agree a deal unless all owners of the property sign up to the deal.  As both A and B signed up to the deal it would be very difficult to argue that both A and B didn't benefit from the deal.  If all the money released went to B there is a very real possibility that A would be classed as deliberately depriving themselves of their share of the capital to maintain benefit entitlement.
A of course could argue their case but trying to explain why they agreed to a deal with no direct benefit to themselves may prove problematic.
In any case it would be down to a decision maker to make that call.

Whilst A could block the equity release from happening by simply not saying yes, there is nothing stopping B wanting to sell the property once they realise equity release is not possible. If I were A I'd be more worried about this.

Sea_Shell

kaMelo said:

Sea_Shell said:

peb said:

One point, B wants the money but doesn't reside at the property.  So I don't think any ER company will accept this.  Secondly any monies raised would have to be for the benefit of both.  I can't see a Solicitor signing off on this scenario 

That's good to know.   

Does ER go through solicitors?

It's a non negotiable condition of equity release that all parties receive independent legal advice.
No equity release provider will sign off on the deal without documented proof that this advice has taken place.  This is to protect the company when the inevitable mis-selling complaints are made in the future.

I realise you're asking a very specific question regarding equity release and pension credit but in all honesty, it's a rather niche scenario you have described, as such I highly doubt there are any similar examples to reference and the best anyone here can offer is a good guess. For what it's worth this is my guess;

I imagine no equity release provider will agree a deal unless all owners of the property sign up to the deal.  As both A and B signed up to the deal it would be very difficult to argue that both A and B didn't benefit from the deal.  If all the money released went to B there is a very real possibility that A would be classed as deliberately depriving themselves of their share of the capital to maintain benefit entitlement.
A of course could argue their case but trying to explain why they agreed to a deal with no direct benefit to themselves may prove problematic.
In any case it would be down to a decision maker to make that call.

Whilst A could block the equity release from happening by simply not saying yes, there is nothing stopping B wanting to sell the property once they realise equity release is not possible. If I were A I'd be more worried about this.

Thanks for that.   I had no idea that ER would have to be that rigorous.   But it's good to hear that it is.

My initial thoughts were as you've summarised, that A would be deemed to have benefited, by the fact they've agreed to it, and would probably lose their PC.

So if the subject comes up again, I shall just make this point crystal clear, along with all the other reasons why its a bad idea.    Another "weapon" in the armoury, so to speak. 

After all these years, I don't think B would go down the "force a sale" route, but never say never.    But I agree that A is in a delicate position, but the status quo works for them. 

ATEOTD Their "best interests" are at odds with each other.   There is a flippin' big can of worms lurking in all this....that will pop open one day.