Equity Release and Your Parents
Equity release is financial tool available to homeowners aged over 55. Most people who release equity from their home do so with a Lifetime Mortgage, which is a loan against your home, reducing the equity left in the property. It allows people to access some of the wealth in their property without having to sell it.
It is a complicated financial product and your parents will need to take expert financial advice.
If your parents decide to release some of the cash tied up in their property, you may have questions and concerns.
We answer some of the most frequently asked questions here.
Will I lose my inheritance?
If your parents intend to leave you an inheritance in their will, they can still do so when they have released equity. However the equity left in the estate will be reduced.
When equity is released from a property using a Lifetime Mortgage, the debt is paid after the owners have died. The property is sold and any remaining assets go to beneficiaries.
It is possible to guarantee an amount for beneficiaries to inherit. You may wish to discuss this option with your parents.
Some people actually choose to use equity release as a sort of “living inheritance,” gifting money now rather than after they die.
You and your parents may need to seek advice from an independent tax adviser if this is the case. Equity release can be used as financial support for children or even grandchildren. In fact, it is one of the most popular reasons for equity release.
Are there any limitations on how my parents can spend that money?
No, there are no restrictions. It is entirely up to them what they choose to do with the money.
What if I would like to take over their house after they pass away?
The house will be sold after death. Any money left over will go to beneficiaries. If you want to take ownership of the house, it may be possible to do so if you pay off the debts. It is worth discussing your parents’ Will and Estate Plans with them to ensure you are fully aware of their wishes.
What do I do if my parents already signed for equity release and I would like the property?
Talk to your family and ask if it is possible for the provider to tailor the contract to make you a devisee. Make sure you a/re aware of all the spending and fees that you will need to pay once you claim your right to the property.
If you would like to hear more about equity release options, please call us on 0333 000 2097 or email your query to firstname.lastname@example.org
Access Equity Release is a trading name of Your Mortgage Decisions Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA), FRN 459763.