Equity Release: Get Cash from Your Property

Equity release refers to a way of legally releasing wealth that is tied up in capital property without having to move out or sell it. There are several ways of getting this done. You can either borrow money against the property and pay the loan later or you can sell part of the house (or all of it) and get continuous monthly payments or a lump sum.

What Is Conveyancing?

This term refers to the legal transfer of home ownership from a seller to a buyer. The conveyancing process is said to have begun when a buyer’s offer on a home is accepted and only ends after the seller hands over the keys. Professionals who offer conveyancing services are called conveyancers or conveyancing solicitors. Sometimes solicitors also handle conveyancing matters. The conveyancing process can also be done by the home owner even if they are not a solicitor.

The Conveyancing Process

As mentioned, the process begins once an offer is accepted from a buyer. The seller then has to draw up a contract for the transfer of ownership. The contract will contain lots of information including property boundary, price, date of contract termination, development restrictions, legal restriction on the property and much more. The solicitor’s job is to draft the first contract and negotiate relevant details if necessary.

Exchange of Contracts

One the conveyancer or solicitor is done with the negotiations and everyone is happy, both sides sign on the dotted line and exchange copies of contracts. If either party pulls out at this point then they are liable and must pay compensation to the aggrieved party.

Completion

This process involves five main procedures. At this point the deal will be coming to a close and the following must be done:

Payment must be transferred from buyer to seller

Legal documents are given to the buyer

The seller must vacate the property and leave it as the contract stipulates

Key is handed over to the buyer

The buyer moves in

Equity Release in Detail

Equity release is the process of freeing up money tied up in capital property e.g. a house. Property owners have two options when it comes to this process:

Lifetime mortgage

Home reversion

Lifetime Mortgage

Most people considering equity release usually end up opting for the lifetime mortgage option. This is perhaps because with this option, you do not need to make any repayments for as long as you live. There are, however, some institutions that allow you to make some payments on the capital and the interest. In the UK, the age at which you can take out this type of mortgage is 55. The amount you can borrow is placed at sixty percent of the value of your property. Again as with regular financing, these conditions often vary depending personal situations and other factors. 

As the home owner you usually have the right to stay in your property till you are unable to take care of yourself and have to move perhaps to an old age home and interest rates are usually fixed for the entire life of the loan (if it varies then a cap is placed on it). You get a no negative equity guarantee with the lifetime mortgage and you can move as long as the mortgage institution approves of the new property as security. The best thing with this facility is that when you take the money in small amounts, the interest you pay is only on those small amounts. It offers a lot of flexibility.

Home Reversion

There are people called reversion providers. When you sell part or all of your property to them then you have done what is called home reversion. In the UK, home reversion can get you up to 60 percent of the market value of your property. As with life mortgages, home reversion has a few conditions. The age requirement is usually 60 years but some institutions take in 65. Factors such as how much you can get, whether you get paid in bits or in one lump sum, whether or not you can move after the reversion, negative equity guarantee all vary depending on your personal situation and the lending organization.

As financing facilities, both conveyancing and equity release are viable options although you may need the guidance of a solicitor to know which best suits you. Equity release allows you to sell part of your property and retain part of it so it is suitable for people who need money but do not necessarily want to let go of their home. Conveyancing is for people that need to sell property legally and completely.

 

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