Believe it or not the way you own your property is very important if you want to leave a share of it to somebody in your Will. For example:
Owning as "Joint Tenants"
This way, neither of you owns an identifiable share of the property. You collectively own the whole thing - essentially you hold it on trust for yourselves. This means that when one of you dies, the property automatically passes to the survivor(s). It does not matter whether or not the deceased co-owner had a Will.
Owning as "Tenants in Common"
By owning this way, you each own an identifiable share of the property. Unless you have stated otherwise, this will be 50% each for 2 owners or one third each for 3 owners etc. You are each free to use your share in any way you want. You can give it away during your lifetime, or can leave it to someone under your Will. Owning as Tenants in Common, the property will not automatically pass to the surviving owner(s) so it is vital that you each have a Will.
At what point in the process is it legally binding?
You can withdraw from a sale or purchase up until the point contracts have been exchanged. Any deposits paid after exchange of contract will then by non-refundable. After contracts are exchanged you are then responsible for the property you are buying and should arrange suitable insurance from this date.
How can I find out more?
If you are considering releasing some of the equity in your home, please book an appointment and we will be happy to discuss your options. We can meet you with your financial adviser if you wish, to make sure the advice is integrated. If you do not already have a financial adviser, we would be happy to recommend a specialist, independent adviser who can discuss your circumstances in detail.
How long are local searches valid for?
A local authority search completed for a house purchase is valid for 3 months.
How long does the conveyancing process take on average?
We usually say 8-12 weeks for an average sale or purchase. Queries and concerns can often come out of the local authority searches which need further investigation and sometimes this leads to re-approval from the Mortgage lender. This can add further time into the process.
Is Equity Release right for me?
It may be that you could consider other options instead, such as moving to a smaller property or cashing in other “nest eggs”, such as premium bonds or savings.
What happens if we can’t produce certificates for work we’ve had done on the house we’re selling?
You can indemnify the work by taking out an insurance policy. This means that you can not be held liable for any future fault on the work that was done. We can arrange this for you
What is Stamp Duty and how much will I have to pay?
Stamp Duty is a tax levied by HM Government on a transfer of property. For residential single property ownership this tax is calculated at 5% for the portion of the property value between £250,001 and £925,000, 10% for the portion between £925,001 and £1,500,000 and 12% for the portion £1,500,001 and over. Duty may also be chargeable on any rental charge (leases only) - this affects both residential and commercial leases where different thresholds are applied. There are different rates for First time buyers and "second homes/buy to let".
What is the difference between Joint Tenants and Tenants in Common?
Tenants is Common is where two or more people are entitled to the proceeds of sale in distinct shares - on the death of one, his/her interest will not pass to the survivor(s) but will be part of his/her estate. Joint Tenants are on the other hand 50/50 Co-owners of land - when one of them dies, his/her rights of ownership pass to the survivor(s).
What will it cost?
There are all sorts of “hidden” costs including:
- Completion, arrangement or application fees
- Valuation fees
- Insurance
- Early repayment charges
- Legal fees
Other considerations
You should also consider the following:
- If your circumstances change in future, will you be able to move home?
- Any equity release scheme will affect the inheritance you are able to leave to your children or grandchildren
- There could be implications for your entitlement to social security benefits
- Who will be responsible for repairs and maintenance of the property?
- Tax implications