As our general health improves and life expectancy increases, the result is often an increased pressure on the finances of elderly people. In the current times of low interest rates, poor returns on investments and reduction in the value of savings and pensions, a number of homeowners are turning to equity release.

Whilst this used to be seen as a last resort to enable elderly people to release capital from their home, it is often now used as a form of financial planning.

Once spent, the cash benefit is not available to pass on to your family or other chosen beneficiaries. However, your estate is reduced for inheritance tax purposes by the money to be repaid to the loan company on your death.

The solicitors role in Equity Release

A solicitor cannot give you financial advice but will help you understand the legal aspects of the plan and deal with the legal requirements.

When deciding on Equity Release you will have the choice of two different schemes. They include:

Lifetime Mortgages - the most popular method of releasing cash against your property. It is a loan which enables you to release money which is tied up in your home in the form of a cash lump sum. No repayments are required during the loan and it is paid off when your home is sold, or when you enter into long term care or at the time of your death.

Home Reversion Plans - this involves selling a percentage of your home and being granted a lifetime lease allowing you to remain in your property, rent free, for the rest of your life. In turn, you will receive a tax free cash lump sum. At the time of your death the property is sold and the proceeds are divided between the plan provider and your estate in the percentage that each party owns.

Pinkney Grunwells have specialists in equity release to assist you and ensure that your experience is smooth and stress free.

If you are considering taking out an equity release plan, ensure that it is supported by SHIP (Safe Home Income Plans). All reputable lending institutions should subscribe to the SHIP Code of Practice.