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Equity Release - Get Advice First

Do you know someone who is looking at an equity release scheme to release capital? If so, tell them to make sure they don't go into it without first consulting the professionals.

This note of caution follows an important ruling handed down from the Supreme Court concerning a woman who sold her home to a nominee purchaser appointed by a company specialising in Equity Release. She was promised she could remain in the property indefinitely at a discounted rent and was further tempted by the prospect of being able to obtain additional capital sums after 10 years.

The woman was granted a two-year tenancy of her home. However, the purchaser mortgaged the property to a lender who was unaware of the tenancy. It was three years later that the woman discovered a possession order had been granted in respect of her home due to the purchaser's defaults on the mortgage. An issue arose as to whether she had any right to remain in the property. A judge's ruling that she had no such right was subsequently upheld by the Court of Appeal.

This is an example of an old and very bad Equity Release scheme. "Current schemes are much safer and the industry has cleaned up its act, thank goodness. The real down-side to Equity Release these days is how expensive it is in terms of the interest paid on the loan. You should always seek financial and then legal advice before signing up.