When the borrower dies, the loan and the rolled-up interest are repaid from the estate, and that usually means selling the property. The executors run the sale. The contract sets the time allowed, the estate pays the costs, and interest continues until it is repaid. This sets out the sequence and the questions worth asking in the first call.
The loan and the interest are repaid from the estate. The executors sell the property, the contract sets how long they have, and the costs come out of the estate.
Equity release may involve a lifetime mortgage, secured against your property, or a home reversion plan. It will reduce the value of your estate and impact funding long-term care.
The Equity Release Council are plain about the position. The family will not automatically inherit the property, because the provider is entitled to recover as much as possible of what they lent under their first charge, and that often means the property has to be sold.
Where it is being sold after a death, they say the beneficiaries or the executors of the will are in charge of selling it on the open market, through an estate agent, so that it achieves what is known as its market value. So this is not something done to the estate. It is done by the estate, with the executors holding the pen.
The Council say they would have to discuss with the provider whether it might be possible for them to pay off the remaining debt. It is a conversation to open early rather than late, because everything else runs on a clock.
Equity release and what you leave behind →It sets the timescale and the terms, and every other question on this page is answered by it. The Council say the equity release contract will explain how much time is allowed to sell.
Documents worth finding →The Council say the time allowed is typically between six months and one year. Typically is their word. The contract, not this page, is what governs.
The no-negative-equity guarantee →A lifetime mortgage rolls up interest until it is repaid. The balance on the day of death is not the balance on the day of completion, and the gap grows with the time taken.
How rolled-up interest works →The Council say you or your estate are responsible for all the costs of the sale, including solicitors' fees, and that some providers also charge an administration fee for removing their charge at the Land Registry.
This is the part executors are most alarmed by when they find it, so it is worth stating with the context the Council give it. Most providers include a very specific power of attorney in their contract terms and conditions, which lets them take over a sale if progress is not being made by the borrower or their personal representatives.
The Council immediately add the thing that makes sense of it: the power is completely standard in all residential mortgages and is not peculiar to equity release. In effect it makes sure the lender can sell the property and recover what it is owed. It is not a punishment and it is not unusual. It is the reason to keep the provider informed of progress rather than to go quiet.
A plan meeting the Council's product standards carries a no-negative-equity guarantee, which means the borrower will never owe more than the property is worth. That protection is about what can be claimed from the estate, and it is one of the reasons the standard exists.
It does not mean the family inherit the house. The Council say the family will not automatically inherit, and where the debt has consumed the value there may be nothing left. The guarantee limits the downside rather than creating an inheritance.
What a particular contract allows. The timescale, the fees and the provider's powers are all terms of the plan, and only the plan document answers them.
Anything about the estate, probate or tax. Those are questions for the solicitor acting in the estate, and this page is not a substitute for one.
Anything about administering an estate. Probate, tax, the duties of an executor and the terms of a specific contract are legal questions, and an executor is personally responsible for getting them right. We are not solicitors or advisers, and this page describes the process rather than telling you how to run one.
Equity release requires repaying any existing mortgage. Money released, plus accrued interest, would need to be repaid upon death or moving into long-term care.
Gathering these first makes every conversation with the provider shorter.
Questions worth asking the provider in the first call.
What is the redemption figure today, and what does it become each month?
Interest keeps rolling up. Knowing the monthly movement tells you what a delay actually costs the estate.
How long does the contract allow, and from what date does it run?
Typically six months to a year, but the contract governs and the start date matters as much as the length.
What do you count as progress, and how often do you want to hear from me?
The provider's power to step in is triggered by a lack of progress. Ask them what avoids that.
What fees will the estate pay to you on redemption?
An administration fee for removing the charge is common. Better on the list at the start than a surprise at completion.
If the family want to keep the house, what would that take?
The Council say it has to be discussed with the provider. There is no point discovering the answer after the agent is instructed.
Short answers to the things that come up most. None of it is advice, and every figure on this page carries its source.
The executors. The Equity Release Council say that where the property is being sold after your death, your beneficiaries or the executors of your will are in charge of selling it on the open market, through an estate agent, so that it achieves what is known as its market value. The provider does not sell it for them in the ordinary course.
The contract decides. The Council say your equity release contract will explain how much time will be allowed for you or those acting on your behalf to sell the property, and that the time allowed is typically between six months and one year. Typically is their word, so the plan document is what governs rather than any general figure.
They can, and the Council explain why. Most providers include a very specific power of attorney in their contract terms and conditions allowing them to take over a sale if progress is not being made by the borrower or their personal representatives. The Council add that this power is completely standard in all residential mortgages and is not peculiar to equity release.
The estate. The Council say you or your estate will be responsible for paying all the costs of the sale including solicitors' fees, and that some providers may also charge an administration fee for removing their charge against the property, which is registered at the Land Registry. It is worth asking for that figure early.
Possibly, but it has to be agreed. The Council say the family will not automatically inherit the property, because the provider is entitled to recover as much as possible of what it lent under its first charge. If the family wish to keep the property they would have to discuss with the provider whether it might be possible for them to pay off the remaining debt.
Equity release may involve a lifetime mortgage, secured against your property, or a home reversion plan. It will reduce the value of your estate and impact funding long-term care.
One qualified equity release adviser. They will go through your figures and tell you if there is a better answer. It costs nothing and commits you to nothing.
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