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What happens to equity release on death?

Article | Sept 2023

Exploring equity release to unlock tax-free cash from your home raises important considerations regarding the fate of the plan after your passing or entry into long-term care, along with the repayment process.

The repayment process

Upon death or entry into long-term care, the equity release plan must be repaid. In the event of death, the executor of your estate informs the equity release lender, providing the necessary documents. If entering long-term care, notification is necessary from either yourself or a designated individual.

For Lifetime Mortgages, your inheritors typically have approximately 12 months to repay. This commonly involves the sale of your home, but alternative repayment methods can be used if your inheritors can settle the loan without selling the property.

The repayment approach hinges on factors such as whether the plan is under one name or jointly. In the case of joint plans, repayment operates on a 'second death' basis, continuing until both plan holders pass away or enter permanent long-term care.

Impact on loved ones

Responsible Life exclusively considers lenders who are Equity Release Council members, ensuring the application of a no-negative-equity guarantee. This safeguard ensures that you will never owe more than your home's value. Consequently, your loved ones are free from inheriting any Lifetime Mortgage debt.

While equity release will reduce your estate's value, the no-negative-equity guarantee remains a steadfast protective measure. It assures that, regardless of changes in the property market, the amount you owe will never exceed your home's worth. Releasing equity could also affect your entitlement to means-tested benefits.

Ready to embark on your Responsible journey or seeking more information? Use our free equity release calculator to estimate your tax-free cash potential. Alternatively, connect with our UK-based Information Team at 0800 048 5807 for initial inquiries and guidance on scheduling a no-obligation appointment with our qualified advisers.

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