How Does Equity Release Work When You Die?

It’s not a nice thought, but it’s a question that many people want to know about equity release: how does equity release work when you die?

This type of mortgage is different from your typical residential mortgage in that you’re not expected to pay it back in your lifetime. Instead, you pay off the loan when you die or go into long-term care. Essentially, you only pay back the loan when you’ve left the property for good.

You have the right to live in your home as normal.

How does the process work?

Your beneficiaries must inform your equity release lender when you die. They will typically have around 12 months from the date of your death to repay your plan, which is usually through the sale of your property.

If there is any money leftover, that will form part of your inheritance.

With a no-negative equity plan, which most equity release loans come with, your loved ones won’t be financially affected should the value of your estate be worth less than the remaining loan and interest. Instead the remaining amount will simply be written off.

The interest will accrue until your loan is paid off in full or settled.

What should your beneficiaries be aware of?

• As part of your welcome pack, you should receive a plan reference number. This should be kept in a safe place and known to your beneficiaries so that they can quote this number to the lender when dealing with your equity release plan after your death.
• Beneficiaries will have 12 months after your death to notify the lender. They should also inform the home insurance provider and apply for a Grant of Probate to sell the property. A solicitor can assist with matters relating to probate.
• So they can contact the executors of the estate, the lender will need to see a copy of your death certificate and the probate document. The lender will then communicate with the executors to discuss repaying the loan.

Find an equity release plan today

Interested in securing an equity release loan? If you’re over the age of 55, contact the Agentis mortgage advisors today to find out if you’re eligible and whether you could benefit from releasing equity on your home. Our ‘Whole of Market’ brokers can help find you the right plan for your circumstances.

*Equity release is not right for everyone and may reduce the value of your estate.