Equity Release, particularly Lifetime Mortgages, can offer financial support for those going through difficult times. Still, it is essential to be aware that these types of mortgages come with significant risks and costs. While equity release or lifetime mortgage schemes may be the right solution for some people, they should always be considered as a last resort. Before committing to Equity Release or Lifetime Mortgages, you must understand exactly what you are signing up for and whether this type of financial instrument is your best route. It is also important to consider alternatives that may be more suitable and less risky than Equity Release or Lifetime Mortgages, such as downsizing, accessing state benefits, and seeking debt advice.
It can sometimes take months to get approved for an Equity Release or Lifetime Mortgage, and you mustn’t feel pressured into making a decision immediately – a specialist advisor will never put pressure on you but instead, allow you to make an informed decision and strongly recommend that your family are involved with the process. By releasing equity from a property, someone going through a divorced can receive a lump sum or regular income, which can be used to cover legal fees, buy out a former partner’s share of the property, or even start a new life.
In terms of Lifetime Mortgages, these types of mortgages allow the borrower to stay in their home while receiving either a lump sum or regular payments. The loan, plus interest, is repaid upon the borrower’s death, entering long-term care or when they sell the property – should they ever wish to downsize. Similarly, Home Reversion plans involve selling a portion or all of the property to a provider, who then pays the homeowner a lump sum or regular payments. Again, the provider only receives their monies once the property is sold, either after the homeowner passes away or goes into long-term care. We do not recommend Home Reversion plans simply because you lose home ownership as are selling your property at a reduced market value to reflect the buyer’s risk and ultimately become a tenant in your own home.
Equity Release and Lifetime Mortgages can be particularly helpful when a couple is separating, as they can divide assets without having to sell the property outright. It’s important to note that these options may not be suitable for everyone and should be carefully considered before making a decision. Seeking advice from a financial adviser or mortgage broker who is independent and carries the relevant qualifications and experience is essential to understanding the full scope of these options.
In conclusion, Equity Release and Lifetime Mortgages can offer a lifeline for those going through a divorce. They provide a way to access funds that can be used to cover costs associated with legal fees or property buyouts, learn more about how much you can receive with our equity release LTV Calculator. However, weighing the risks and considering the long-term implications before making any financial decisions is essential.