Equity Release for Couples

Couples seeking equity release should do so with a joint equity release application, whether that is a joint lifetime mortgage or a joint home reversion plan. It is important enough that most providers will insist on a joint plan if there is a couple living in the property, whether married, in a civil partnership or simply living together – even if the house itself is not joint owned.

A joint equity release arrangement works that the house is sold only when the last surviving partner dies. Should one of you pass away before the other, the agreement passes completely to the surviving party and acts as a single equity release contract from that point on. In this way, your partner is protected from any fear of being evicted from their home upon your death.

What happens without a joint equity release arrangement?
In the case where the equity release is in only one name, then the second partner is vulnerable. Under the terms of the contract, the lifetime mortgage must be paid, or the home reversion plan realised. This is likely to result in the loss of the home for the survivor.

Contract timing – how long do they have before becoming homeless? Most equity release arrangements must be completed in three- to six-months of your death. This is typically enough time for the appointed agents to complete a sale. Anyone still living in the house would have this time and no more to find alternative living arrangements.

Many providers, however, have no provision for a renegotiation in this way, which leaves a few limited options:

Ending the equity release contract early. This would involve paying off the balance of any lifetime mortgage held on the property or buying out the home reversion plan as the contract details. In this instance, there would be additional early repayment charges and unless there is a substantial amount of spare savings or cash, raising the capital to do so may involve selling the house anyway.

Discussing with the provider or potential replacement equity lender the option of taking out a replacement lifetime mortgage to pay off the first. Again, this would result in early repayment charges and would be subject to the agreement of the provider, but some lenders are willing to negotiate in this way.

Looking to a life insurance plan to cover the expected sum of the payment due. The premiums on a life insurance policy of the required size and term length could be considerable, but it remains a viable option for some. Issues such as age and health, both considered a helpful factor in accessing higher levels of equity for release, could prove to be obstacles in procuring life insurance.

Planning for an eventual move. Sad though it is, the realistic option for most is simply to accept that it is a situation that might happen and plan accordingly. Putting money aside for future living expenses and speaking with family to ensure the financial security of your partner is taken care of when you pass are both prudent strategies.