Equity Release after Divorce or Separation – Guide with Warnings
Our preferred equity release adviser is Age Partnership. For free and impartial money advice you can visit MoneyHelper.
Our preferred equity release adviser is Age Partnership. For free and impartial money advice you can visit MoneyHelper.
If you’re asking, ‘can I use equity release to buy out my partner?’ then you’ve come to the right place. We help over 7,000 people each month to understand equity release better.
In this article, we will guide you through:
- What equity release is.
- How to keep your home’s equity safe.
- Who can apply for equity release plans.
- Ways to get a realistic quote.
- The difference between lifetime mortgages and home reversion plans.
We know that understanding equity release after divorce or separation can seem complex. But don’t worry; we’re here to make it clearer. With our expert advice, you can gain a better understanding of your options. We’re familiar with the worries you might have about equity release and separation. Together, we can explore how equity release can help you buy a new home or cover divorce costs.
By sharing our knowledge and experience, we aim to make your journey through equity release a bit easier.
Here are the options and benefits of equity release after separation.
Can you get equity release if you are separated?
Yes, you can get equity release on a property you own if you’re separated. You’ll need to be the sole homeowner to do this.
There might be a way to take out an equity release mortgage on your joint home during the separation process. Read on!
» TAKE ACTION NOW: Find out how much equity you could release
How can it help me buy a new home after separating?
Many couples separate and leave one person in a tricky situation to find new housing. This forum user paints a familiar picture:
An equity release plan could be the solution for both parties.
There are some equity release providers who will help you to buy out your ex-partner’s percentage of your property using an equity release plan.
They will provide you with a lifetime mortgage providing the loan is first used to buy out your ex-partner who has agreed to sell their percentage of the property to you.
This will allow the home to become your sole and permanent home, and it would allow the other party to receive significant funds from their share of the property.
This is a complex situation which is best discussed with professionals and alternative borrowing options should be considered. Nevertheless, some media reports suggest that more people are using lifetime mortgages as a way to split assets after a divorce.
How equity release could help
More than 2 million people have used Age Partnership to release equity since 2004.
How your money is up to you, but here’s what their customers do…
Find out how much equity you could release by clicking the button below.
In partnership with Age Partnership.
Can it help with the costs?
Equity release plans like a lifetime mortgage wouldn’t be the best method of borrowing just to pay divorce costs. Most divorce costs are around £2,000 at most and lifetime mortgages require you to borrow significantly more.
Alternatively, you might be able to take out a home equity loan or unsecured personal loan to help with divorce costs. There is also government funding to help with divorce fees for those on a low income.
What will happen with the plan?
Getting divorced is less likely in later life when you may have already taken out a lifetime mortgage or home reversion plan. But it could happen.
The rules on what this means for your equity release plan will be stipulated in your equity release agreement. There could be different rules imposed but it’s common for the plan to switch to a sole plan in the name of the person who will continue living at the property.
If the property is to be sold as part of the divorce, the sale proceeds will need to pay off the equity release debt first.
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What if you move?
If you move to a new property, you might be able to take your equity release plan
to the new property, providing the new property is deemed suitable.
But what does suitable mean exactly? Well, it means that the new property is of a similar or higher value and it will just be as easy to sell on the property market in the future.
You can also take your plan to a less valuable property, but you might have to pay off some of the loan in the process which could also trigger early repayment fees – unless a downsizing clause is included in the agreement.
