If you are thinking of applying for an equity release scheme for the first time, you may not be familiar with the requirements of the process, or how long it might take. The processing period heavily depends on you preferred equity release scheme. For a lifetime mortgage, the process may take from 6-8 weeks, and for home reversion schemes a longer term of 12 weeks. This process comes with a cost. It is advisable to have adequate cash since you will be required to hire several professionals throughout the process. You can click here to find out more about the stages of the process & payments required.
Basic Stages in the Equity Release Application Process
The first step is to determine if equity release suits your needs. If you are not sure about your options, you can consult an independent equity release adviser. The adviser will be in a position to take you through your finances and help you determine whether or not you need the equity release.
If your mind is settled on equity release, the adviser will show you the schemes that can suit your financial position. Discuss the plans fully with your adviser. Some advisers may require you to sign a terms of business and confirmation letters, confirming the services offered and the fee to be paid among other documents. The number of documents you sign depends on the execution style of your adviser. This process may take a week.
The two equity release schemes available to you are home reversion and lifetime mortgage. A home reversion plan requires a partial or full sale of your home in return for a lump sum payment or monthly instalment setup. Lifetime mortgages come in a variety of types, but are based in an equity mortgage. It is a loan that accrues interest for the life of the loan. However, in this process you retain full ownership of your home. For some lifetime mortgage can be the more comfortable option. For more about equity release programmes click here.
Once you select the best equity release scheme, you are required to fill in the equity release application form and submit to the preferred lender. The application form asks for specific personal data about you, your health, and about your home. Your health can be a factor of life expectancy which determines the funds given out through either home reversion or lifetime mortgages. The application will need approval; however, the lender will need information about the house like its value to determine if you qualify.
The lender then appoints a valuer to inspect the property and give a detailed, accurate report. You may be required to pay for the valuation. This process may take up to two weeks.
Even with the valuation, you may not see full value offered in the mortgage or reversion scheme. Lenders are in the business to make money; therefore, the amount you are lent is dependent on market conditions and projections for future increase in value of your home.
Based on the valuation report and your personal details, the lender replies to your application with an offer. You can hire a solicitor to help you through this stage. The offer clearly details the type of equity release scheme that is accepted, the amount the lender is willing to give, and the period of time over which you can take the loan. This stage takes up to two weeks.
A solicitor hired by you to help you with this deal is a good idea because they can examine the paperwork, look through the legal jargon, and help lay out the decision before you including any disadvantages the process might have. By law you are required to have a different solicitor than the lending company personnel.
The solicitor carefully examines the offer, and explains to you the meaning of the terms in the contract. They also explain to you the impacts of the contract, and what you will be expected to do. Once you are comfortable with the terms of the offer, you are required to sign a certificate, which is then sent to the lender. This process takes up to 2 weeks.
The lender releases the money to the solicitor, who in turn pays off outstanding mortgage payments and loans. Depending on your agreement, they may take their fees and forward the rest of the money to your account. This can take up to two weeks.
Visit www.EquityReleaseSupermarket.co.uk to find out more about how mortgage plans affect your equity release schemes before you apply.
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