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Equity Release & Joint Ownership

Unlocking funds from your jointly-owned property can be straightforward, but there are things you should know about equity release first.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: July 11, 2022

If you’re looking into equity release, it’s likely you’re over 55 years of age and are hoping to benefit from taking money out of your property for a particular reason. So how does it work if, like most people, you have a joint mortgage with your spouse or partner?

Here we look into whether equity release for joint ownership is possible, what the implications are, what happens if you’re outside the criteria, what the alternatives might be, and how a professional advisor can help steer you through the application process.

Can you get equity release on a jointly-owned property?

Yes, you can. As long as both homeowners meet the eligibility criteria individually, joint equity release is as straightforward as a joint mortgage would be. The risks come into play when the situation is not quite as linear, such as age differences or who is on the title deeds, which we will go into in more detail further down.

If your circumstance is within the confines of traditional joint equity release regulations – that is, that you equally own the property, that you’re both over 55, and your property meets the necessary benchmarks of the lender – you are considered ‘joint tenants’ and this form of financing in later life should be open to you.

You should still be fully aware of the ramifications of releasing equity, and working with an experienced equity release broker is an ideal way of ensuring you know what to expect and whether this kind of borrowing is right for you both.

If you are ‘tenants in common’

This is slightly different to being joint tenants. If you have chosen to legally register an unequal share of the property’s ownership, perhaps because one partner has contributed more financially, for example, then you are tenants in common. Equity release is still possible in this instance, however it is a little more complex.

When one person dies or goes into long-term care, there may be restrictions placed upon the surviving partner because their estate is instead distributed to their heirs, in accordance to their will. If the joint owner is not named in that will, it could have an impact on their home going forward. Which type of equity release plan you have – a lifetime mortgage or home reversion plan – will also have bearing on this situation.

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How much equity can joint applicants release?

This depends on a number of factors, including how much of the property you own, how old you are, the value of your home, and whether you’re applying for a lifetime or home reversion option. Generally speaking, the older you are the more you can borrow. This is because costs are recouped by the lender when you pass away or go into long-term care.

While the percentage you can borrow varies from lender to lender, the maximum is about 60% of your property value, although some equity release providers will be flexible for particular circumstances, such as medical conditions.

What if one homeowner is under 55?

This is another area where lenders set their own parameters for lending criteria, however 55 is usually the lowest age they will go for the youngest party. Some may be 60+. If one joint homeowner is under this age and equity release is still preferred, this could only happen if they handed their share of equity over to the older homeowner, and they could be required to sign an occupancy waiver before approval is sealed.

This is where equity release can get legally risky for the future, so it’s always wise to find an expert in this field to talk over the fine details with.

How a specialist equity release advisor can help

It is crucial to understand these potential hazards on the horizon before committing to this kind of financing. There are interest rates to take into consideration as well as the complicated small print on these loans, which are intended for a quick win financially but they always pay off for the lenders, so be wary not to get caught off guard because the consequences could be life-changing for one partner.

Despite the risks, equity release is becoming a very popular choice of financing for those in later life. In fact, this kind of borrowing in the UK reached £4.8bn in 2021 – six times greater than in 2011 (£789m), and tripling in the three years previous, according to the Equity Release Council.

This is helping to provide the market with choice and flexibility, with an abundance of products if you know where to find them. A good broker will be able to find the right deals for joint applicants with a variety of backgrounds, keep risks to a minimum and work with you to help you understand the full picture.

They will also offer practical help with applications and paperwork.

What if only one person is named on the deeds?

Both parties must be on the title deeds to be on the joint equity release plan. If both partners agree, a name can be added to the title deeds at the same time as the equity release is drawn up, which will have an additional legal fee.

Bear in mind that the youngest person will still be required to fall within those strict minimum age limits when the equity release plan begins.

Properties with more than two owners

Only one or two homeowners are permitted to take out an equity release plan on any given property, even if any other owners fit the age limits and criteria. In order to take out a plan, other owners must give permission to be taken off the title deeds if equity release is still the preferred option, which comes with obvious drawbacks for them.

What will the costs be?

The amount you borrow is tax-free, whether you choose to receive the equity in one lump sum or in instalments (or both), but there will still be the usual loan costs to pay, such as legal and arrangement fees. You will also pay interest on the loan – probably between 3-4% – and if you are selling a portion of your property to the lender via a home reversion plan, they won’t pay you full market value for that.

Alternatives to consider

While equity release is quickly becoming a go-to safety net to fund retirement or care, there are other options out there if this kind of product doesn’t fit with your circumstances.

Potential alternatives include…

Remortgaging a jointly owned property is the main alternative here and this is certainly possible as are joint retirement interest-only mortgages. But the best way to decide which option is best for you is to consult first with an experienced equity release specialist.

You can also read more about equity release alternatives in our standalone guide.

Get matched to an equity release specialist

When heading into unfamiliar and complex financial territory, you will need an impartial broker on your side, one who specialises in joint equity release applications. The experts we work with are just that, as well as experienced and trustworthy, and have access to the whole equity release marketplace, which they work hard to scour for the very best deals for their clients.

We can match you with the right advisor for your unique circumstances, who will in turn tailor their service to match your needs. Get in touch and get a free, no obligation consultation chat. Call us on 0808 189 0463 or make an enquiry today.

FAQs

Can I get equity release on a shared ownership property?

No, you wouldn’t qualify for this kind of financing if you don’t have either a single or joint mortgage on the entire property you’re borrowing against. You must be the sole owner/s to be eligible.

Find out how to get the professional advice you need in our guide to Shared Ownership mortgages.

Does equity release have to be in joint names?

Yes, if you are either joint tenants or tenants in common (you own the property with another person), the plan has to be in both names. You must both be in agreement and both receive the loan in unison.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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