Once the decision to proceed with equity release is made the next consideration to be made is on the timing of the application. Ask your financial adviser how long it takes to set up an equity release plan. The answer provided by your adviser should be that the whole equity release application process takes around 6 – 8 weeks on average to complete. Therefore, if you are planning a purchase with these monies such as a house, car or holiday, then the timing of the application is essential and these timescales should be borne in mind.
The 6-8 week duration is needed for the lender to process your application which includes; arranging and carrying out a valuation of the property, obtaining all necessary documentation and identification, completing the legal processing of the equity release plan and the release of the funds via the solicitor to the applicants bank account.
Home reversion plans take a few weeks longer than lifetime mortgages. This is because home reversion plans involve selling a portion of the property to the equity release provider, as opposed to lifetime mortgage plans. Lifetime mortgages are essentially loans that are repaid once the house is sold; until which time you retain full ownership of the property. The additional paperwork required with a home reversion warrants the extra time needed in setting up a home reversion plan. This involves setting up the lifetime tenancy and recording the swapping of ownership at the Land Registry.
Initially, the applicant receives a key facts illustration, setting out and outlining the terms of the plan. Once this has been agreed, the applicant then signs the equity release application and gathers all the relevant documents needed for the application to be processed. The application then needs to be submitted to the lender, who will arrange a valuation of the property and arrange for a solicitor to start dealing with the legal paperwork. A mortgage offer is then made by the equity release company, a copy of which is sent to the applicant and the originals go to the solicitor. The solicitor then liaises between the client and the equity release provider in order to agree and set the completion date.
Equity release is becoming a mainstream mortgage concept that has been developed for people who want to use some of the savings built up in their property without the need to sell the property and move home. Rising costs of living, particularly those of long term care, longer life spans, and the increasing gap between income and spending during retirement are the chief reasons for the growing public enthusiasm for equity release schemes.
The equity release market has opened up in recent years, with a much wider variety of equity release plans now being available from a variety of lenders. While there are different types of plans within each category, the two main types of equity release plans are home reversion plans and lifetime mortgage plans.
Whether it is lifetime mortgages or home reversion plans, the basic considerations for lenders to underwrite an equity release plan are the value of the property and the age of the applicant. For certain types of plans, such as impaired life or enhanced equity release plans, the health of the applicant is also considered.
Equity release application processing times have been shortened over the years with more streamline procedures and specialist equity release solicitors such as members of ERSA (Equity Release Solicitors Alliance) becoming involved. This had led to evidence of case completion times being experienced with brokers such as Equity Release 2go.com of just 3 weeks. For further information on the application process, speak to an equity release adviser on freephone 0800 321 3159.