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equity release what happens when you die

This article was last updated on 1 October 2020.  

Equity Release – What happens when you die

Retiring from your job can be very stressful especially if you have not figured out how you will support your expenses.

Equity release is a favourable option for many people as it provides a reasonable financial boost. However, getting a loan against your property will always evoke questions of what will happen when you die. Additionally, it’s important to know what your loved ones need to do after you die.

Topics that you will find covered on this page

What is equity release?

Equity release gives you the option to borrow money from your property and still maintain 100% ownership of the property.

The money given is the equity that has built up on the property over the years. Most people go for a Lifetime MortgageDrawdown Lifetime Mortgage or Home Reversion plan.

You can read more about how equity release works here.  Alternatively, here is a short video.

How quickly must the equity release plan be paid after death?

After the last owner of the property dies or moves to a nursing home, the beneficiaries must inform the equity release providers.

They need to show them the death certificate, and other related documents, as this is to ensure that the lenders know that they now need to deal with you with regards to repayment of the equity release mortgage.

The equity release plan typically needs to be paid within a 12 month window period. Some estates decide to put the house on sale to get the money to pay the provider. Others opt to put the house up for rent as this ensures that the provider gets a certain amount at the end of the month. However, if you are looking to sell the house then having tenants could cause some challenges.

A point to note is that the interest keeps on the building during those 12 months. If the money can’t be repaid within the 12 months, the provider talks it through with the beneficiary to come up with a new plan to be able to pay the money. Ultimately the provider is able to repossess the house if the money is not paid back.

What happens to your spouse when you die?

If you had applied for joint plans when taking up an equity release plan, then your spouse will continue living in the house until they die or move to a nursing home.

When taking out the equity release, you should ensure that you indicate on your documents that you want a joint plan. If not, your spouse might be forced out of the house at an earlier stage than you may have anticipated. This can be very devastating to them to be forced out of their home and can in some circumstances lead to depression.

To ensure that your spouse is taken care of even when you are not alive, we would suggest that you do look in to the benefits of having a joint plan.

Is there any need for a solicitor in case one spouse dies?

Depending on the complexity of the affairs of the person that died, there may be a need to apply for probate.  In this circumstance you will probably need to engage with a probate specialist or solicitor.

In the case of a joint plan, and one spouse dies, the other partner in the agreement will continue taking responsibility for the equity release (assuming they are receiving regular payments) until they die or move to a nursing home.

You might also choose to involve the solicitor once both the partners have died.

You can also choose to get advice from a financial advisor.

A financial advisor can help you come up with a plan on how to pay the lenders money back. They can also help you find out of some benefits that can help you out with additional income to help you pay the providers money.

Try out our free equity release calculator – see how much money you could release

How equity release affects your inheritance after you die

Most people opt for equity release as a way to sustain their livelihood.

Equity release can be very helpful if you have no other source of income. However, they do impact your inheritance after you die, as quite simply you wont have a house to pass on. This means that your family don’t get to inherit your home, which is something neither you nor the family may want.

 

Would you like some help to see whether equity release is the right option for you or to find out what the latest deals are? We can help

You can either book an appointment using the calendar, leave your contact details or call us, via Key Equity Release directly on 0800 953 3792

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Would you like some help examining equity release?

We work with with Key equity release for them to bring you their market leading equity release support. Through a free consultation they can help you decide what the best options could be for you. 

If you would like some help, please leave your details below and someone will be in touch.

Or you can call Key directly on 0800 953 3792

More interesting articles about Equity Release

how does equity release work

In this article, we answer 22 important questions that you may have about equity release, including what it is, how it works and what the best interest rate deals are.

Alternatives to equity release

Equity Release is not for everyone.  In this article we look at the alternative options that you can consider if you need access to money in later life to pay for care, top up your pension etc.  

Lifetime Mortgages

A lifetime mortgage is the most popular type of equity release scheme, as it’s the most flexible and versatile option. The amount you receive depends on your property value. 

Pros & Cons of Equity Release

In recent years equity release has become a very popular option. This article looks at the pros and pitfalls of equity release and what you need to consider before taking it out.

How much can you borrow

How much you can borrow from equity release varies depending on your age and house value.  In this article we look at how much you could borrow from your  home.  

Drawndown Lifetime Mortgages

A drawdown mortgage is a type of equity release scheme, offering greater flexibility and freedom compared with traditional plans. In this article we explain all that you need to know.

Equity Release Calculator

An equity release calculator will give you a good indication of what you can borrow from your home.  This article explains how the calculator works and also shows you what you can receive.

what happens when you die

One of the big concerns that people have about equity release is what happens to their home and borrowings when they die.  In this article we explain everything you need to know.

Home Reversion Plans

A home reversion plan is primarily suited to individuals over 65 looking for a solution to their finances.  This article explains all you need to know.

Meet the author

Rob Atherton

Rob Atherton

Rob writes and edits the content produced by the rest of the team. He has a degree in History from Leeds University and has producing, reviewing and editing the site since 2016

Meet The Team

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Recent reductions in interest rates mean that there are some great equity release deals available. Speak to a specialist.

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