Can I Lose My Home From Equity Release?

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Written by Daniel Tannenbaum on June 6, 2021

Updated June 10, 2021

Typically, you will not lose your home from taking out an equity release plan and the Equity Release Council has strong rules in place to prevent this and to ensure that your home is always yours.

However, there are some certain circumstances where your home could be repossessed by an equity release provider and this would usually be because the property has not been maintained properly, been left unoccupied or false information was given.

 

Key Points

  • It is very rare that you will lose your home from equity release
  • The Equity Release Council has firm standards in place to ensure that your home is always yours
  • Your home could be repossessed if it is not maintained, is unoccupied for a long period or false information was given by you to the lender
  • Make sure you understand the terms of equity release and compare different rates and plans to find the best one for you

 

How The Equity Release Council Protects You

All equity release providers must be approved by the Equity Release Council and you will usually see this badge on their website and documentation. The Equity Release Council governs and regulated the equity release industry and there are a number of things that they put into place to ensure you can maintain ownership of your property.

For instance, the Equity Release Council confirms that your house will always be yours when using a lifetime mortgage and you have the right to sell it whenever you want, benefit if it increases in value and continue to live in it until you die or go into long-term care.

Another rule in place is a ‘no negative equity guarantee’ which ensures that your family will not be left with any debt once you die or go into long-term care. So even if your house is sold for £300,000 but you owe £350,000 once all fees are included – the remaining debt (£50,000) would be written off and your family would not be liable for this.

 

How Your Home Could Be Repossessed By An Equity Release Company

There are some scenarios where your home could be repossessed and you could lose your home.

  1. False Information – If you gave false information on your application, perhaps by not stating your correct age, income, address or falsified documents, there could be a claim for the lender to repossess your home, only if they have granted you a large lump sum initially.
  2. Your Property is Left Unoccupied – If your property has been left unoccupied for more than 6 months and you have not been taken into care, depending on the circumstances your home could be repossessed.
  3. Your Do Not Maintain The House – If you do not look after the property and it majorly declines in value, this could be a reason for repossession since the lender would need to recover what they gave out to you.
  4. If The Loan is Not Repaid – Equity release lenders offer a 12-month window for the loan to be repaid once the borrower has died. This is usually taken from the estate, any other savings or the property can be sold or rented out. But as a last resort and if all other options are not viable, the property could be repossessed.

 

However, these circumstances do not change the fact that you can continue to live and enjoy your home for the rest of your life.

You should always check the terms and conditions of your agreement, since every equity release provider and product can be different. If you are keeping within the guidelines, you should be absolutely fine.

 

How To Make Equity Release Work For You

Do not borrow more than you need – With equity release, you are charged interest the more you borrow and longer that you have the loan open for. To whilst it might seem logical to release more money and try enjoy your retirement to the max, you will be paying interest on a lot of money that could be sitting in your account and you are not getting any use from it. You can always secure an additional loan as part of your equity release program if you need to – but determining how much you need initially is a good starting point.

Check it does not affect your state benefits – Some pensioners rely on their state benefits which is based on an income assessment. Getting a huge lump sum from equity release can affect this, so be sure to check that getting an equity release plan does not impact your on ongoing state benefits.

Make sure you understand the terms – Everyone has different requirements so make sure that you double check the terms of your agreement and have all your options available, whether it is putting money aside for your children’s inheritance or if you wish to pay off your equity release plan early, you want to avoid having any surprises further down the line.

Compare, compare, compare – With more than 100 types of equity release products available in the market, you should compare all the different types and options available to you, including lifetime mortgages, lump-sum, drawdown, interest-serviced and home reversion too.

To get a free and no obligation quote for equity release plans, you can start your enquiry with Lending Expert today.

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