Will my kids inherit debt?
It is a myth that taking out equity release means you will pass the debt on to your children.
If you choose to unlock cash from your home then you will be protected against this thanks to the safeguards in place with plans approved by the Equity Release Council.
You will never owe more than the value of your home
Key recommends Equity Release Council approved plans, all of which come with what’s known as a ‘no negative equity’ guarantee. This means that you’ll never owe more than the value of your home, and therefore will not be in the position of passing debt on to your beneficiaries.
When you and your partner pass away, or move into long-term care, the sale proceeds will be used to repay the amount you owe, and any money left will go to your estate.
Taken directly from the Equity Release Council’s website, your protection is as follows: “When your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more.”
If you want to pay equity release back before you pass away you can. However early repayment charges may apply. Your adviser will outline all of this to you clearly before you commit to your plan.
What if I go into care?
If you or your partner goes into long-term care, the other can continue to live in the property and your plan would not normally be affected. However if you both require long-term care, the plan will end when your property is sold, but you will not have to pay early repayment charges.
If you have any further concerns about passing on debt to beneficiaries your adviser will be happy to reassure you and answer any further questions you may have.
If you are considering equity release we recommend that you read through is it right for me?