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Equity Release for Properties Owned as Tenants in Common

If you own a property and are tenants in common, then you might be wondering whether or not you would qualify for an equity release scheme.

It is important to understand that all equity release plans continue until the last owner of the property passes away.

This means that you will be able to take out an equity release plan if you are tenants in common, and the plan will continue until the final tenant in common passes away or moves into a care home.

Firstly, it is important that you understand the differences between joint tenancy and tenants in common, and understand how these differences might affect your equity release application.

How do I know if I jointly own my property as joint tenancy or tenants-in-common?

It is incredibly important to know whether you are a tenant in common or are in a joint tenancy, as there are some key differences between the two types of property ownership.

It is incredibly important to understand the differences between the two when you first take out your mortgage so that you know exactly what agreement you are getting yourself into.

However, it is only natural to forget what type of ownership you agreed on years after signing on the dotted line. If you are considering taking out an equity release plan and loan on your property, then you will need to familiarise yourself with your mortgage and ownership rights.

A joint tenancy is when you each own the whole amount of the property, meaning that you co-own the property. If one of you passes away then the surviving owner inherits the other’s share of the property.

Tenants in common is when each co-owner owns a certain percentage share of the property, usually depending on how much deposit each individual first put down when they bought the property.

If one of you passes away, then the individual’s share of the property passes down to their next of kin, who will inherit that amount.

If you are considering an equity release loan, but do not know whether you are a tenant in common or own your property as a joint tenant, then you can always check your property’s title deeds and your mortgage contract.

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What are the benefits of being a tenant in common?

There are a number of benefits and features when it comes to owning your property as a tenant in common.

For example, when you own a property as a tenant in common, you are able to specify exactly how much of your property you and your tenant in common own.

This could be a 60% / 40% split, or as much as a 90% / 10% split. This usually depends on how much you have contributed to the deposit to buy the property [1].

By opting for tenancy in common, you are also able to share your will with whomever you want. This means that you will still be able to leave your percentage of the property to whoever you want, even if you only own as little as 10% of the property.

This means that if you do have children from previous relationships, you are able to leave the value you own in the property to them if you would choose to do so.

What happens to your equity release plan when one tenant in common passes away?

Regardless of who owns how much of the property, all equity release plans are designed to last for as long as the homeowners are alive, or until they move into long-term care.

This means that even if you are a tenant in common, you are able to take out an equity release plan and remain living in your home for as long as you live, even if your partner passes away or if you own as little as 10% of the property.

The lender will also not be able to ask you for any money until after you pass away or move into a care home.

When the last remaining owner passes away, then the money and value of the property is given to whoever is written in the will. It is incredibly important that you understand what happens upon the death of the first and second owner so that you are fully prepared in the event of their death.

It is incredibly important that you speak to your solicitor about this when you take out an equity release loan, so that things can be put in place when the time comes and so that your assets and money are both protected.

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​​Can you get equity release if more than two people own the property at the same time?

You are only able to take out an equity release loan if one or two people own the property.

If the property is owned by more than two people, then the parties must agree for people to leave the agreement, leaving one or two remaining owners. In this case, their names would have to be removed from the deeds.

You will need a solicitor to do this for you, which is why most people do this alongside their equity release application and use their equity release solicitor to process this for you. This will most likely be built into the cost of your equity release application.

Can you get equity release if one joint owner is under 55?

Unfortunately, the minimum age for all equity release schemes across the UK is 55 years old.

If you are a tenant in common and one homeowner is aged over 55 years old but the other is aged under 55 years old, then the equity release application can only be made under the name of the individual who is aged over 55 years old.

Unfortunately, in some cases, this also means that the tenant in common who is aged under 55 years old might have to be removed from the deeds.

If this is the case, then it is always advised that you both seek independent, legal advice before doing this, as this could have major repercussions to the individual aged under 55 years old.

How much equity can joint tenants in common release?

How much equity you are able to release from your property as a tenant in common will depend on a number of different factors.

Of course, a lot of this will depend on how much money you have invested in your property in the first place. It will also depend on how much equity you want to release.

Most equity release lenders allow you to release up to 60% of the total value of your home, but this will always depend heavily on your current state of health and of course, your age.

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What happens if one tenant in common becomes bankrupt?

If one tenant in common becomes bankrupt, there might not be any assets let after you or they pay off any debt that you own through bankruptcy proceedings.

However, it is important to remember that the other tenant in common would be able to sell the property without having to pay back any money that is currently owed to the lender(s).

However, depending on the amount of debt, the remaining tenant in common might not be able to sell the house without having to take responsibility for the debt owed.

If you are considering releasing equity from your home but have previously been declared bankrupt, then it is important to be open and honest with both the other owner of the property, to your equity release advisor and to the lender about the current state of your finances.

As Citizens Advice explains, if your tenant in common is declared bankrupt, you won’t be liable for any debt you have with them, but you might still be responsible for the full amounts [2].

What is equity release and how does it work?

Equity release is an easy way for people who are aged over 55 years old living in the UK to get access to the equity that has built up inside their home over the years.

That will include your monthly mortgage repayments (minus any interest) as well as the initial deposit put down on the property and the total market value of the property, compared to what you bought it for.

The great thing about equity release is that you get to choose how you receive and spend your money.

Some people opt for a lump sum, whereas others choose to opt for a drawdown plan where they will receive their money through smaller, frequent payments. This will all depend on how you want to spend your money.

There are few, if any, restrictions on how you spend your equity release funds, with some people choosing to spend their money on home improvements, their family or a once in a lifetime holiday.

The other great thing about equity release is that you do not have to repay your loan until after you pass away and your loved ones sell your house.

This might mean that your next of kin receive less inheritance, but they will never be deemed liable to pay off any debt from your equity release loan.

Please call our 24-Hour Helpline: 0330 058 1579

Speak to Equity Release Warehouse

If you would like more information on how to release equity from your home, then speak to a member of our team to use our equity release calculator.

Our team are on hand with the very best advice across the industry and will never put any pressure on you to release equity unless you feel like it is definitely right for you.




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