Christmas can be one of the most expensive times of the year, and you may be wondering if you have enough time to get equity release before Christmas.
You should apply before November for the best chance to get equity release before Christmas. The timescale from applying to receiving the funds is usually eight to twelve weeks. Some simple applications can be completed in as little as three weeks; however, more complicated cases can take many months.
While taking an equity release to help buy Christmas presents wouldn't be recommended, many applicants will want to know if their case will be completed in time for Christmas.
This guide will give you an understanding on how likely you will be to complete before Christmas, and if the festive season is a good time to take an equity release.
Will my equity release complete by Christmas?
The earlier that you apply, the greater chance your case will have of completing before Christmas.
Most cases complete within 12 weeks, so as long as you submit your equity release application at least 12 weeks before the festive period (the 2nd of October to save you the maths), it should be complete by Christmas.
If you apply after the 2nd of October, it could still complete, but the longer that you leave it, the less chance you will have of completing before Christmas.
Firstly, let's recap on equity release?
The most common type of equity release, lifetime mortgages, are a special type of mortgage designed for homeowners aged 55 and over.
You release a percentage of your property value, known as Loan to Value (LTV). You don't need to make monthly payments towards the plan; instead, you typically repay the balance when the last borrower passes away or moves into long-term care.
The amount you release is not affordability-assessed, so you may still be eligible if you have a low income. The equity release lenders calculate the amount you can release mainly on your age and property value.
For a full guide to equity release plans, click here.
Applying 12 weeks before Christmas should leave plenty of time; however, it shouldn't take longer than eight weeks.
Therefore, it should be possible to complete an equity release before Christmas if you apply before the end of October.
Below is the typical time scale for an equity release.
Equity release applications usually take around 8 weeks:
|Equity release advice & submitting your application
|Your property valuation
|The formal mortgage offer
|Equity release legal advice
Note: 1 week extra allowed for contingency.
Sometimes delays happen during your application, with conditions that must be satisfied before the lender agrees to release the funds.
Examples of why it might take longer than eight weeks include:
- Your property valuation is lower or higher than your estimate
- Your title deeds need updating, such as an ex-spouse still being listed as an owner
- The lender passes your property for review to the funder for further inspection after the valuation
- You are extending your lease
- You are going through divorce/separation
Sometimes complicated cases can take months, meaning the Christmas deadline might not be achievable, even if you apply before the 2nd of October.
Your equity release advisor should be able to give some guidance on the expected time scale, considering your circumstances.
Will Christmas delay my equity release application?
Christmas should not delay your equity release application unless you submit it too late.
In fact, we usually find applications complete quicker before Christmas, as solicitors, lenders and advisors want to get through as much of the workload as possible before they close the office.
However, most companies will work until the 23rd/24th of December and re-open on the 2nd of January.
Even if equity release lenders and solicitors are open over the festive period, they will be running at lower capacity due to staff taking annual leave.
Therefore, between Christmas and New Year, your application will have little to no progress.
If your equity release does not complete before the 24th of December, you will likely need to wait until the New Year.
Should you start an equity release before Christmas?
Starting your equity release journey before Christmas can be a great time for you to explore your options.
Even if you think you will likely not need equity release for months or years, it is never too early to speak with an equity release advisor.
A great part about Christmas is that it often gives us more time to spend with our loved ones. Exploring your equity release options before Christmas can allow you to discuss them with your family and friends before deciding to take an equity release.
Is it a good idea to use equity release to pay for Christmas presents?
I recommend against taking equity release to pay for Christmas presents.
It can be an expensive solution, and the minimum amount you can release is £10,000, which is much more than you will likely spend over Christmas.
Alternatives might be better unless you feel very generous for one year.
I have written an article discussing the alternatives to equity release which you should consider.
However, there is no legal reason why a portion of an equity release couldn't be used to pay for Christmas presents or provide your loved ones with an early inheritance.
You must discuss your plans with your equity release advisor, as making such gifts will reduce the value of your estate and could prevent you from paying for your essential needs in the future (including any private care).
If you have further questions, why not speak with one of our qualified advisors?
Call us on 0207 158 0881 or use our online form to book your FREE consultation.
While a qualified equity release advisor has written this guide, it is not intended to be used as financial nor legal advice and should not be relied upon.
To understand the full features and risks of an Equity Release plan, ask for a personalised illustration.
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