The Question
I have a mortgage on my property which is worth £340,000 but would like to take out equity release. In principle, would I be allowed to do this and how would it work?
To put you in the picture, I still have £80,000 left to repay, and I am three years into a five-year fixed rate. I am 65 and my partner is 63, but she is not on the mortgage as she has recently moved in. I am hoping to use the money to repay the mortgage but would like a to release a little bit extra (approx. £30k) to carry out some refurbishments.
Mark’s Answer
Thank you for providing me with some basic information, and I can confirm that based on your age and property value it may be possible for you to raise the capital you need for your objectives. Based on your age currently you could raise up to 36% of your property value – £122,000.
With a flexible Lifetime mortgage, you could use £80,000 to replace your existing mortgage, to give you more flexibility and choice with your payments, and still have the additional funds you require for your other objectives.
However, as your home and mortgage is only in your name, any capital that you raise will need to be repaid if you die, or move into long-term care. Therefore, as your partner is not a co-owner, they would have to sign a disclaimer to confirm that they would agree to move out of your home on your demise.
Of course, if this scenario happened they would need to vacate the property, hence this should be carefully considered before you proceed. It is possible for your partner to be added to your mortgage and the title of your home, and you can limit the percentage amount they own in this arrangement. Consequently, as a joint owner, they could then live in the property for the rest of their life.
However, your options and choices need to be carefully considered and you should take independent legal advice before you make a final decision. If your partner has their own property, they may be willing to sign the declaration to move out of your home and return to their own home and you are happy to continue.
One further point of note would be that as you are three-years into a five-year fixed rate, I would envisage there could be early repayment charges (ERCs) that would need to be considered if you replaced it now. As details of any ERCs have not been provided, unfortunately I cannot make judgement on that aspect at this stage.
Therefore, for more information, and detailed advice and guidance, speak with one of our independent whole of market experts who will help and guide you without obligation or hesitation.
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
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