Author: , CertPFS, CertCII(MP), CeRGI, CeLTM, CeRER
Last updated: August 24th, 2023
Equity Release is a popular financial product for the over-55s that can help unlock the value built up in your home. At John Whyte Equity Release, we have many years’ experience providing expert advice, so you get the right equity release plan for your individual needs. You can use the money in any way you wish, there’s no need to move out and you will still own your own home. But what happens when you are no longer able to live there?
At some point in the future, moving into a residential home or nursing home could become a necessity, should you no longer be able to live unassisted in your own home. While this could well be the best solution for your physical health and mental wellbeing, it would mean having to move out of your home. Importantly, if you have a Lifetime Mortgage, this would be affected.
Single or joint equity release?
For individual equity release plans – i.e., agreed by a single homeowner whose name is the only one on the property deeds – moving into long-term care will bring the agreement to an end. This means the final balance (the amount borrowed plus any accrued interest) is now due for repayment in full.
For joint equity release plans – i.e., agreed by both parties whose names are on the property deeds – the agreement does not end when one homeowner moves into long-term care. While the provider must be notified that one of the plan holders no longer lives there, the other plan holder can carry on living there until they move into care themselves or pass away.
In all cases, the equity release mortgage will come to an end when the final occupant moves into long-term care or passes away.
What happens when the plan ends?
Winding up an equity release plan after the last occupant has left the property will be the responsibility of whoever is dealing with your affairs, or the executors of your will. The process involves
- Choosing a preferred estate agent and obtaining a current market valuation
- Marketing the property and agreeing the sale
- Ensuring vacant possession upon completion of the sale
Interest on the Lifetime Mortgage will accumulate until it is repaid, which makes a speedy property sale a desirable outcome for all concerned.
The equity release provider will normally allow a timeframe of 12 months for your executors to complete the property sale and repay the debt in full. If this is not achieved, there will be a review of the case. If no other agreement can be reached, the property could ultimately be sold by the lender.
No Negative Equity Guarantee
In the unlikely event that the value of the property and the sale price achieved is less than the outstanding loan, the No Negative Equity Guarantee comes into play. The mortgage lender will then take charge to ensure that the property is sold for the best possible price to minimise their losses.
If you have a Lifetime Mortgage through John Whyte Equity Release, be reassured that we are members of the Equity Release Council, meaning we provide a No Negative Equity Guarantee on all our equity release plans.
This guarantee offers valuable protection against negative property price fluctuations that could otherwise leave your family out of pocket when it comes to repaying the loan. In other words, with a No Negative Equity Guarantee, the beneficiaries will never have to repay more than the property is worth when it is sold.
Does the property have to be sold?
When the equity release plan comes to an end, selling the property is the obvious solution to repay the Lifetime Mortgage. Once the debt is repaid, any remaining proceeds can then be shared among your family members or heirs. However, the sale of the property is not the only option. Your family can retain ownership of your home if there are other funds available to settle the mortgage repayment in full within the stated 12-month period.
Do bear in mind that the above only applies to Lifetime Mortgages. If you have a Home Reversion Plan, an alternative type of equity release that involves selling a share of your home rather than taking out a loan against it, ownership of the property will revert to the lender when you move into long-term care or pass away. The property will then be sold, and the proceeds shared in accordance with the lender agreement. Any money left over will go to the homeowner’s family or heirs.
Get in touch
For more information about Lifetime Mortgages and to help you decide which plan is best for you, John Whyte Equity Release is always available for expert advice. Call us on 01903 890660 or message us your enquiry here.
To understand the features and risks of a Lifetime Mortgage, please ask for a personalised illustration.