The natural end of a capital release plan is when you die or move to a nursing home, but you can repay sooner if you want. Some lenders will charge early repayment fees (ERC) for you to pay them sooner. However, there are several exemptions you can use to avoid additional charges. In most cases, your capital release plan will have to be repaid within 12 months of your death.
The first step is for your beneficiaries to contact their lender, who will ask for a copy of the death certificate and the probate document, so that they can contact the executors of their estate. Your lender will then contact your executors and ask them how they plan to repay the plan, either through the sale of your property or other means. As mentioned above, after the death, your equity release plan is usually reimbursed with the proceeds of the sale of your property. This is done by the executor of your estate.
When you die, your capital release plan is reimbursed. Your beneficiaries must inform their lender of equity release and, with a lifetime mortgage, they usually have 12 months after their death to repay their plan. Usually, this happens through the sale of your property; however, it can be by any financial means. Once your capital release plan has been repaid, the surplus money will be part of your inheritance.
When you die, your home will usually be sold. The money raised from the sale of your property will pay the real estate agent, the attorney’s fees and the remaining money will be used to repay the equity release loan. Once all these payments have been fulfilled, any remaining proceeds will go to your beneficiaries. When you die, your home can be sold so that the capital release plan can be paid.
The sale will generally be arranged by the executor of the will, who will also be responsible for repaying the capital release plan, both the principal and the interest accrued. They will also be responsible for organizing services, such as real estate agents and lawyers, and will be required to pay for these services, using the proceeds from the sale of the house. The surviving plan holder continues to live in their home and the capital release plan continues until they die or move to long-term care. If the loan is to be repaid through the sale of a property, as long as your lender is a member of the Equity Release Council, you are protected by the negative non-equity rule, which means that the loan will never exceed the value of the property.
When your capital release plan is contracted for the first time, the lender will give you a welcome package that includes contact details, including a plan reference number. If your home equity loan is in joint name, both you and your spouse or domestic partner, the debt will only be repaid once the last surviving homeowner dies. For example, they may want to use the property as an investment, as a purchase to rent, and therefore repay the equity release plan with a purchase-for-rent mortgage or alternative means of financing. If leaving an inheritance behind your children is a priority, there are equity release plans that allow you to protect additional amounts of equity.
Talk to an unbiased capital release expert to discuss if it’s the right choice for your family. The release of capital has allowed UK homeowners to finance their dreams in the future by freeing up money tied up on their properties, most commonly by taking out a lifetime mortgage. The Equity Release Council sets specific rules about what happens to surviving partners if one of the borrowers dies. You will continue to live on your property normally and you cannot be forced to leave, as long as you have chosen a plan regulated by the Financial Conduct Authority and the Equity Liberation Council.
An alternative approach is to organize care in your home, which will not affect your capital release plan at all. The amount you release is charged with a fixed interest rate that continues to accumulate, increasing total debt when it comes to selling the property. If they don’t have this data or can’t find it (and the broker originally used is still exercising), their beneficiaries can contact them to find out how to get the details of the equity release lender. In addition to the fact that your beneficiaries will accept your death, they may not be familiar with how the capital release works or what liabilities they may have.
However, individuals who apply for the release of capital can “enclose” a fixed amount of money that their beneficiary will inherit, so that they know that they will definitely receive the specified minimum amount of inheritance, regardless of when the plan ends. This is because equity release lenders generally apply early repayment fees for leaving the agreement early. . .