Is one allowed to extend one's house under any of the equity release plans?

Most of the equity release schemes allow the extension of one's house. You can extend your house, irrespective of the scheme that you have taken. However, you had better ask your equity release scheme provider for his approval, if you have such plan.

Does a person have to purchase another house, if he sells his house?

No. The term of an equity release scheme ends with the sale of a property. If you borrow a lifetime mortgage loan on the equity value of your house, you need to pay the loan back when you sell the house. If you have taken a home reversion scheme to extract cash from the equity of your residential property, you have to pay a percentage of the monetary benefit from the sale of the property to the home reversion provider. Besides this, there is no other committment.

What will happen if the ownership of a property goes from one to another?

If the ownership of a property is changed following a marriage, remarriage or divorce, you may have to repay what you have released from the equity value of the property. The new owner may not be allowed to stay in the house after the death of the previous owner who had taken the equity release plan. Different schemes come with different terms and conditions. You had better seek out this sort of equity release information from your provider.

Can a retiree live with his son or daughter after he has sought out a scheme to liquify the equity of his house?

Yes, they can. However, anyone living with the user of any equity release scheme in the house shoud be over seventeen in age. They may be asked to sign a form by the equity release scheme provider in order to waive their right to live in the house. As it is a legal issue, legal advice should be sought after.

Does one need to pay tax on the lump sum released from the home equity?

Generally, there is no income or capital tax on the lump sum, released from the home equity under either a home reversion scheme or a lifetime mortgage plan.

Follow the next blog answering more questions on house equity release...