Home Equity Release
Accessing your home equity through a loan allows you to access money that is otherwise tied up in your home. This may be a viable option when you are considering home renovations, needing to consolidate debt or wanting to give your children a head start in the property market. Your home equity is based on the difference between the appraised value of your home and the current mortgage you owe (if any). Banks generally ask for you to obtain legal advice before making the decision to access your home equity as there are a few pitfalls to be aware of.
Home equity release is a growing market. Therefore, it is important to understand the type of home equity release you are considering.
Home Reversion Schemes
A Home Reversion Scheme involves the sale of a percentage of your property to the bank or home reversion scheme provider and in return you receive an immediate lump sum payment. When you later sell the property, or it is sold through your estate after you pass, the bank or scheme provider will be entitled to receive a percentage of the sale proceeds equal to the share it ‘purchased’ from you initially.
Guarantor / Guarantee Advice
A guarantor signs a guarantee on behalf of a borrower, who is applying for a loan. Since there is a significant financial risk, the role of guarantor is usually limited to the borrower’s immediate family members. For example, you may go guarantor for your children, so they are able to purchase a house. By doing so, you are then legally responsible to pay the mortgage if your children default on the loan. If you are considering going guarantor for your children, it is worth speaking with a lawyer prior to signing any papers.
Mackinnon Jacobs Lawyers ensures you are protected from every angle and can assist with all aspects in relation to home equity release. If would like our experienced lawyers to provide you with personal, tailored advice, call or contact us via email.
Would you like to know more?Contact our property law expert Brian Irving on 1300 424 452 to receive personalised advice about your case.