Equity release offers a convenient way to access some of the money in your home, providing funds for retirement needs without having to sell up and move.
There’s a few different options, but regardless of the type you choose, getting professional advice ensures that you understand the terms and protect your interests.
This short guide focuses on whether you need your own solicitor when applying for an equity release plan.
Please Note: The content on this page is designed to be a helpful starting point for understanding equity release. It explores the concept, different plan types, and the general process involved. However, equity release is a complex financial decision with significant implications for your long-term financial security. To determine if equity release is the right option for you, it’s essential to consult with a qualified financial adviser who specialises in equity release products.
Equity release explained
Before we explain what part a solicitor plays in equity release, let’s just cover the basics of what equity release actually is.
Equity release plans allow homeowners to access some of the equity value in their home.
You need to be aged 55 or over to qualify, and there needs to be sufficient equity in your home for the scheme to work.
The idea is that you withdraw a tax free cash sum, or perhaps regular cash sums, and these are only repayable when you die.
There are two types of equity release plan:
Lifetime Mortgages
A lifetime mortgage is a type of equity release where you take out a loan secured against your home.
Interest is charged on the amount you borrow, but you don’t have to make any repayments while you’re alive.
The original loan and the interest are repaid when your home is sold, usually when you pass away or move into long-term care. This is the most popular option.
Home Reversion Plans
Home reversion involves selling a part or all of your home to a reversion company in exchange for a lump sum or regular payments.
Here, you live in the property rent-free until you die or move out, but you’ll no longer own it fully.
You need to be at least 60 years old and the portion of your property you retain will pass to your estate when the plan ends.
UK regulation
The UK has robust regulations for financial products and mortgages attached to your home.
The Financial Conduct Authority (FCA) regulates financial services firms and financial markets in the UK.
As with normal mortgages, the FCA requires all equity release providers (lenders) and their products to be fully regulated and they must adhere to standards set by the FCA.
For equity release specifically they have added extra layers of protection.
First, anyone who wishes to take out an equity release plan must first receive advice from a registered financial adviser.
Second, the adviser must have specific qualifications with regards to equity release products to provide this advice.
The role of a solicitor
In discussions about equity release plans, many advisers will be asked the question: “Do I need a solicitor for equity release?”.
The simple answer is yes, you do.
Whether you choose to go with a lifetime mortgage, or a home reversion plan, or take an income or set up a drawdown facility. All of these will need the assistance of a solicitor.
Your solicitor has two distinct roles to play:
Conveyancing
In this context conveyancing is the process of checking your title deeds and registering a first legal charge for the lifetime mortgage lender.
When your solicitor reviews the deeds they will advise you of any matters that may delay or prevent the equity release process. This will also identify any mortgages or secured loans that need to be repaid as part of this transaction.
Your solicitor will be handling the money you are borrowing. This will be used to settle any outstanding mortgages, pay the solicitors fees (of course) and the rest will be transferred to your bank account.
Independent legal advice
Virtually all equity release providers are members of the Equity Release Council.
One of their rules is that you have to receive independent legal advice concerning the equity release plan you wish to take out.
This must be a different solicitor to the one that the lender uses. Hence, they are independent. You are free to choose whichever solicitor you prefer.
Their job is to make sure you understand the risks, rewards and obligations of the particular plan you have chosen.
They can only provide you with legal advice and are not able to provide financial advice concerning the plan.
❝There are two types of solicitor involved in the progression of an equity release loan. It is a key criterion for those equity release providers who are members of the Equity Release Council that both they and the customer have separate legal representation. This is primarily to avoid any conflict of interest between the parties and to ensure that the customer has independent advice.❞
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Choosing a solicitor
You will have the right to use a legal adviser of your choice.
So if you have used a solicitor in the past, or you have a recommendation, then you might want to go with them.
For the best outcome, you will want to use one that has experience in equity release plans and lifetime mortgages.
Solicitors can also choose to be members of the Equity Release Council.
Using one of these could mean that they are more familiar with equity release products and the requirements of the Council.
Search the Equity Release Council directory for a solicitor.
How long does equity release take?
The initial advice phase can take some time. This is when you first speak to an adviser and they get acquainted with your situation and what you want to achieve.
It’s important not to rush, or feel rushed, at this stage. Choosing to take an equity release plan needs careful consideration.
There’s normally a minimum of three meetings or conversations during this period. More if you have lots of questions!
It may also involve having family members present at some of the meetings.
In terms of the legal work, it normally takes around 8 weeks once you have made a formal application to a provider.
This is for most straightforward cases, where there are questions over the title deeds or unregistered land it’s likely to take a bit longer.
The next steps
You don’t need to make any firm decisions on which solicitor to use until you are ready to apply.
If you think that now is a good time to speak with an adviser then please call us on 0330 030 5050. We can put you in touch with our equity release experts.
For more information about how equity release works, or who is eligible, please visit our Equity Release Hub.
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