Bury and Bolton law firm Clough & Willis is warning potentially vulnerable people in the North West who are under financial pressure during the Coronavirus pandemic to be cautious before they release equity from their homes. It comes after the firm saw an upturn in enquiries since the start of the crisis.
Equity release is a way of staying in a property for the rest of your life by unlocking its value and turning it into a cash lump sum. It can happen either via a lifetime mortgage or a home reversion and is for people aged over 55.
A lifetime mortgage allows you to choose to make repayments or let the interest roll-up. The loan amount and any accrued interest is paid back when you die or when you move into long-term care. Whilst a home reversion means you can sell part or all of your home to a home reversion provider in return for a lump sum or regular payments. You have the right to continue living in the property until you die, rent free, but you have to agree to maintain and insure it.
Lorraine Stratton-Webb, head of the property team at Clough & Willis, said: “The world is facing unprecedented uncertainty – both financially and emotionally. Right now it feels like it’s never going to end but it will. Equity release is a highly regulated sector but I’d implore people to really think about alternative ways of accessing funds in the short term or to plug a financial gap.
Lorraine added: It is a fantastic option for many people but it’s a big decision and one that shouldn’t be taken lightly or in haste. Many pensions have been badly affected by COVID-19 so the panic to find cash is a real issue for many people. However, there is trustworthy advice from the likes of Citizens Advice and The Pensions Advisory Service out there and they should be the first ports of call. If anyone is still considering equity release, then I would strongly suggest they seek independent and impartial advice as soon as possible as it is a life changing decision that has long-term ramifications”