Capital Raising on Parent’s Home

Using Your Parents Home As Equity 

Yes, it is possible to release equity from your parents’ home, but there are several factors to consider: 

1. Ownership and consent – if your parents are the sole owners of the property, they would need to action any equity release arrangement in their names. If you’re listed as a co-owner or have power of attorney over their financial affairs, you may have authority to initiate an equity release process on their behalf, but it’s crucial to ensure they understand and agree to the terms  

2. Equity release options – there are several ways to release equity from a property, including:

   • Lifetime mortgage – this involves taking out a loan secured against the property, with the loan amount plus accrued interest repaid when the property is sold, typically upon the homeowners’ death or move into long term care

   • Home reversion plan – in this arrangement, homeowners sell part or all of their property to a reversion company in exchange for a lump sum or regular payments and the right to remain in the property rent-free for life

   • Equity release mortgage – similar to a lifetime mortgage but with more flexibility in how funds are accessed and repaid

   • Note that it’s essential to carefully research and compare the different equity release options to determine which best suits your parents’ needs and preferences

3. Financial advice – before proceeding with any equity release arrangement, it’s highly recommended to seek independent financial advice from a qualified advisor who specialises in equity release. They can help assess your parents’ financial situation, explain the implications of various options, and ensure they make informed decisions  

4. Impact on inheritance – equity release can reduce the value of your parents’ estate, potentially affecting the inheritance they leave behind. It’s essential to consider the long term impact on their finances and any potential implications for beneficiaries  

5. Legal and tax implications – equity release may have legal and tax implications, so it’s crucial to consult with legal and tax professionals to understand the consequences and ensure compliance with relevant laws and regulations   

6. Alternative options – before pursuing equity release, consider alternative ways to access funds, such as downsizing to a smaller property, using savings or investments, or exploring other financial assistance programs  

For more information on remortgaging – please see our remortgaging guide. 

Using Your Parents Home As Equity Summary 

Overall, releasing equity from your parents’ home can provide a valuable source of funds, but it’s essential to carefully consider the implications and seek professional advice to make well-informed decisions that align with your parents’ financial goals and circumstances. 

I believe we can help you and that you would benefit from speaking to one of our independent mortgage advisers.  Please call 0203 868 9133 one of our consultants will then be able to help you find the right mortgage for your situation.