The Question
I own my own home outright but live with my partner who moved in three years ago. He has never paid any of the mortgage and doesn’t own any part of the house – it’s just my name on the deeds. However, he does pay half the bills and we share the day-to-day living costs.
As I am reaching retirement age, I’ve started looking at equity release as a way to increase my income. However, I wanted to learn more about how this might impact my partner – particularly further down the line when the loan needs to be paid off. Thank you for your advice.
Mark’s Answer
Hello and thank you for your question. It is very important to carefully plan for your retirement and equity release is a viable option to provide you with capital and income to supplement your retirement plans.
Furthermore, you are right to be cautious about how equity release can impact your partner as your home has been his main residence for three years. With equity release, there is the flexible Lifetime mortgage and the Home reversion plan, and one of our friendly, expert advisers would discuss all of your options and carefully build a bespoke solution based on your personal circumstances.
To aid with your question, I will use the flexible Lifetime mortgage as an example, and I can confirm that this is a special type of loan where you secure a mortgage against your property with a fixed rate of interest for the rest of your life or until you need long-term care.
You can use the proceeds of the capital raised for many things including income, home improvements, debt consolidation etc. You retain 100% ownership of your home, and you decide whether to service the loan my making payments or make no payments at all and let the loan increase with compounding fixed interest.
You must own your home and use it as your main residence, and if you decided to apply for a Lifetime mortgage, your partner could continue to live with you until you either pass away or move into long-term care; however, at that point he must agree to move out of the property. Most providers would ask him to sign a formal agreement to do so as part of the equity release application process.
So, in your lifetime or until you need care, your partner can continue to live in your home, but his future would be uncertain if he does not have his own home or an alternative dwelling available.
To provide him with certainty, you may want to consider adding him to the title deeds of your home and you could transfer a percentage of your home to him with the help of a solicitor. He could then live in your home for the rest of his life on your demise.
The percentage he owns would be decided by you and it could be as little as 1%, but this option needs to be carefully considered by you and your family and I strongly recommend that you consider the impact for you and your family with a solicitor before proceeding.
Meet our expert…
Mark Gregory, founder and CEO of Equity Release Supermarket, is here to answer your questions. Mark is an adviser himself with over 20 years equity release experience.
He launched Equity Release Supermarket 10 years ago and it has grown to become one of the UK’s leading equity release specialists.
Email kate.saines@emap.com to ask Mark a question
