There are several different ways to jointly co-own a home. They each impact how equity release can be set up and what happens upon the death of a homeowner.
You are eligible for equity release if you jointly own a property with someone else. Whether the property is owned as joint tenancy or tenants-in-common will impact the plan differently following the first death.
Let's explore different ways to own property jointly and its impact on an equity release.
The first topic we are going to discuss is the technical way that you co-own your property. In England and Wales, there are two main ways that you will co-own a property:
- Joint tenancy - You each wholly co-own the property. If one of you passes away, then the surviving co-owner automatically inherits the deceased's share in the property.
- Tenants-in-common - Each co-owner owns a set percentage share in the property. This could be 50/50 or as little as 99/1. Upon the death of a co-owner, their share passes to their beneficiaries according to their will.
To find out if your property is co-owned as tenants in common, you can check the property's title deeds. If the following restriction is listed under the "Title absolute", the property is co-owned as tenants in common:
RESTRICTION: No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.
We are happy to check with the Land Registry if your property is registered as being owned as joint tenants or as tenants-in-common.
The most common way to co-own a property is as joint tenants. With joint tenancy, you each wholly own the property. If one co-owner passes away, their share of the property automatically passes to the surviving co-owner.
You can access all types of equity release plan if you jointly co-own a property as joint tenants. The equity release plan can run until the death of the last joint owner or when the last co-owner moves into long term care.
As you both will wholly own the property, you will be able to make changes to the plan following the death of the first co-owner. This includes the option of borrowing more money if needed, as well as accessing any unused reserve facility.
Following the death of the last joint owner, or when the last joint owner moves out of the property into permanent long term care, the equity release plan will end. The lender will need to be repaid from the value of your estate (usually from the sale proceeds of the property). Any remaining monies will be distributed according to the last surviving co-owners will.
Can you get equity release if you co-own a property as Tenants-in-common?
Should you establish that you jointly co-own your home as tenants-in-common, there are several ways that the plans differ from a home owned as joint tenants.
If you co-own your property with another person as tenants in common, you can still get equity release. However, upon the death of an owner, your lender may restrict future changes to the plan, including access to borrowing additional money.
Where properties are co-owned, you must make the equity release application in both names. One co-owner can't take equity release on their share alone.
I have written a complete guide on Equity Release for properties owned as tenants in common, which may be helpful for you to read.
This is a fairly common question that I am asked.
If you jointly own a property, it is not possible for one co-owner to take equity release on their share only. Instead, the equity release would need to be made in both names, or one co-owner would have to be removed from the title deeds, and a sole application is made.
Currently, equity release plans can only be made in single or joint names. If more than two people co-own the property, the other parties would have to agree to be removed from the title deeds.
Title deeds can be updated concurrently with an equity release application, but a maximum of two co-owners is permitted.
The minimum age to be eligible for an equity release plan is 55. If a jointly owned home is owned by a homeowner over 55 and another under 55, an equity release plan can only be obtained if the application is made in the name of the one homeowner who is over 55. In this case, the homeowner under 55 would also have to be removed from the title deeds. This can be achieved concurrently with the equity release application.
If you co-own your home with a housing association (or similar), you can still be eligible for an equity release. However, you will need to purchase the remaining share in your home as part of the process.
When considering the amount that you can release, you will be able to use the property's full value.
If you owned 80% of your home, you would need to purchase the remaining 20% from the other party.
If you were 70 years old, the maximum that you could release would be 46.50% of your properties worth. The first 20% would be used to purchase the remaining share of the property, leaving you with 26.50% to spend as you wish.
It is not possible to take an equity release plan on the share that you own only. You must take equity release on the whole property, and you must purchase the remaining shares from the housing association (or similar).
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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