Going down the Equity Release route will take time. As anyone who has bought a house knows, there’s lots of paperwork and it can be a frustrating process. Equity Release in some ways is no different – it’s another of those life decisions involving often the biggest asset someone owns. So, prepare your parents for a number of steps in the Equity Release process. It’s unlikely to be fast cash – which in a way is a good thing – but one of the most common questions people want to know is – how long does Equity Release take to sort out?
How long the Equity Release process takes from start-to-end depends on how complicated an individual’s circumstances are. Generally speaking, a simple Equity Release process will take between 6 and 8 weeks. An Equity Release adviser will be able to help you to establish an estimated time frame when you make your initial inquiry.
Step One – Taking Advice
An Equity Release adviser has certain rules to follow from the FCA (the regulator) and the Equity Release Council. These rules ensure they adhere to the ‘best practice’ in advising on later life financial matters.
The first step will be to complete a questionnaire, often referred to as a ‘fact-find’.
A good adviser will want to understand your parents current finances and any future plans. They will explore all the possible alternatives to taking Equity Release, such as downsizing, using savings and investments, as well as any impact on means-tested benefits.
Most importantly, an adviser should consider how their recommended Equity Release arrangement can cope with a change in circumstances. This takes expertise, experience and knowledge and is worth taking time over.
In essence, a good adviser will look to establish 3 key things
- If Equity Release is possible, and is it an appropriate way of meeting the objectives?
- What type of plan, and which lender best meets your parents needs now, and over the longer term?
- How much money to take now, and how much if any, in a ‘drawdown cash reserve facility’?
Think about more than Interest Rates
Don’t be tempted to only seek out the lowest available interest rate. Cost is just one consideration, with access to cash, and flexibility for meeting changing needs being much more important.
Step Two – Recommendations
Your parents’ adviser will provide a written report, personalised to their own circumstances, detailing why they believe Equity Release is right for them and what research they carried out in arriving at that conclusion. Lastly, if you are looking at a Lifetime Mortgage (as is usually the case), they will let you know which Lifetime Mortgage lender they recommend
The report should be accompanied by a ‘Keyfacts about this Lifetime Mortgage’ which is a document required by the FCA. Together, these 2 documents will tell you most of the important things to consider, as well as costs, projected future sum you will owe, Early Repayment Charges (penalties) for repaying early, and any particular relevant options or features.
The adviser will go through through their report and recommendations, providing the opportunity to ask any questions and to address any concerns. They have to be certain that any drawbacks are recognised – as much as the appealing parts.
Releasing equity is a big decision to take, so your parents should take as much time as they need to understand things.
Discuss plans with family
It is a good idea to encourage your parents and relatives to discuss their intentions with you, wider family or other beneficiaries of their Will. Using the family home to release funds has potential implications if there is an assumption that it will be left when they die.
Step Three - Making an Application
Your parents adviser will submit an application to the recommended lender for approval. This is usually done electronically via a secure website, set up purely for authorised advisers. The lender will check that their name appears on the Electoral Register and run a credit check. They don’t run a ‘credit-score’ so having existing debts won’t go against them in any way. This is all routine procedure to prevent fraudulent applications.
If there are past or current credit difficulties, there’s no need for anyone to feel embarrassed or worried, as lenders are usually sympathetic. A less than squeaky clean credit history doesn’t often affect an Equity Release loan, because there’s no requirement to make any regular payments. However, any credit details should be disclosed, as lenders will decline an application if they believe an applicant simply hasn’t told them the truth.
Tip: Be careful with names
The names used on the application must precisely match the names on formal ID documents as this will carry over on all legal paperwork such as the Mortgage Deed and Title at the Land Registry.
Wondering how much equity you might be able to release from your home? Use the Age Space Equity Release Calculator to receive an instant estimate of what you could release. No personal details required!
Step Four – Valuation
Acceptance of an application for an Equity Release plan will be subject to a satisfactory valuation report, carried out for the lender’s benefit and typically at their cost. The surveyor looks to establish 3 things:
- The open-market valuation of the property, which can vary to what an estate agent might suggest a home is worth.
- That the property meets with the lender’s criteria.
- Whether there are any points they should bring to the lender’s notice, such as recommending specialist reports if damp seems evident, or the close proximity of large trees for example.
Tip: Prepare your home
Your family’s home doesn’t need to look like Buckingham Palace, but surveyors do expect it to be uncluttered and to be able to access every room and space without obstructions in the way.
Step Five – Lifetime Mortgage Offer
The lender will have an ‘Underwriter’ review the valuation report, application, and any other documents required, before issuing a formal Lifetime Mortgage Offer if all is in order.
A copy of the Offer will be sent by post, with further copies going to your adviser and chosen solicitor.
Tip: Mortgage offers can expire
Mortgage Offers have varying expiry dates from lender to lender, so although no-one should feel rushed into going ahead if there are any remaining doubts, your parents would be well advised to be mindful of the timeframes as they make their decisions.
Step Six – Dealing with a Solicitor
Their chosen solicitor will sort all the legal work, liaising with your parents and the lender’s own solicitor throughout, right through to successful completion and paying out the money.
They will ask for certain items, like annual building insurance schedule for example, and identification. When they are ready, your parents will meet with the solicitors face-to-face as required by the Equity Release Council. Some solicitors offer a home service if getting to their office is difficult for any reason.
Only once the solicitor is comfortable that your parents have received financial advice, are not acting under untoward pressure from others; that they understand the implications of the legal contract, then will they be happy to sign an important document known as a ‘Solicitor’s Certificate’. This form is sent to the lender’s solicitor, which tells them that they should go ahead and fix a date to complete the release and pay over the money.
The solicitors fees will usually be deducted, along with any amount agreed with the financial adviser, before paying the rest over. If your parents have an existing mortgage on the property, that will be repaid first before the rest of the money is distributed.
Tip: Get registered online
You can avoid delays by ensuring that your property has been correctly registered electronically with the Land Registry.
Step Seven – Enjoy your Money
With the Equity Release money safely in the bank account, your parents are now free to fulfil their spending plans and to start planning for later life living.
