Divorce: using equity release to simplify the asset-splitting process
Rose & James Heath
- Divorced
- Both aged 73
- Retired
- Current house value: £375,000
Require: £140,000
Maximum loan-to-value: 39% for a single applicant, lump sum
Rose’s story:
Divorce in later life can significantly impact personal finances – especially for women, who are statistically known to have lower savings and pension investments. Splitting assets and wealth can be stressful during divorce, with many parties involved.
Rose wishes to stay in the marital home; her ex-husband, James, has agreed to move out and buy a new home. They have agreed to split the home's value 50:50 and have a joint savings account containing £100,000.
Using equity release to split assets
Three solicitors are involved in the transaction: the two divorce lawyers and the specialist equity release solicitor. For the legal costs, Rose opts to use some of the equity released to pay the legal fees. James agrees to a settlement of £187,500, and Rose accesses £140,000 through a lifetime mortgage at a loan-to-value of 39%. She uses 50% of her joint savings to pay James the remainder of the balance.
Rose can remain in the property, and James can now access his own financial options and buy himself a property.
Rose selects a Lifetime Mortgage.
Rose submits a single application and releases 39% of her property’s value.
She releases a lump sum of £140,000. As part of the settlement, James receives £97,500 of the shared savings.
Lifetime mortgage features:
- Optional monthly repayments
- Client retains ownership of the property
Things to consider:
- Downsizing and other forms of finance should be considered
- Compound interest roll-up if chosen
- Early repayment charges
- Long-term care and state benefits considerations
- A lifetime mortgage may impact the inheritance you leave
Thinking about equity release?
It is important to consider all options before applying for equity release. Speak to one of our wealth specialists, Toni Chalmers-Smith or Senior Associate Solicitor Catherine Banks at Tees today.
This material is intended for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice. Some information quoted was obtained from external sources we consider to be reliable.
Tees is a trading name of Tees Financial Limited, which is authorised and regulated by the Financial Conduct Authority. Its registered number is 211314.
Tees Financial Limited is registered in England and Wales, registered number 4342506.
Chat to the Author, Catherine Banks
Senior Associate, Residential Property, Bishop's Stortford office
Meet Catherine
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Caroline & Alan
Bishop's Stortford
'A big thank you Catherine for your help in securing our recent equity release. Your clear and precise speaking made the process very easy'
Brenda Green
Bishop's Stortford
'I wanted to say a big thank you to you Catherine and your team at Bishop's Stortford for your most impressive and responsive service in helping things go smoothly. I've sold a few houses over the years but never had the benefit of such a good conveyancing service and without your help I have a feeling that things would have progressed very slowly. I'm looking to buy my next house very soon and will certainly be knocking on your door again'
Roger Anthony
Bishop's Stortford
Staff dealt with were professional and well informed and assisted us extremely well during time taken (5 months) during our discussions. Would use firm again should needs occur.
David Marsh
Bishop's Stortford
I was always kept informed of the progress of the transaction by the friendly and efficient Conveyancing Team at Tees. There was always someone available to answer my questions. All in all, a service well worth the very reasonable fee. Thank you very much Tees for a stress-free process.