There are a number of products on the market aimed at allowing people over the age of 60 to obtain access to money by using the real estate property that they own as a basis for obtaining those funds. Most of the products on the market are what are known as Reverse Mortgages. There is one product, that we are aware of, however that is a bit different from most of the others, namely a product called Homesafe Wealth Release.
Homesafe is not like a Reverse Mortgage.
Reverse Mortgages involve a loan to the customers which is secured by a Mortgage over the property. The Homesafe product involves the sale of an agreed share/percentage of the home to Homesafe, however the customers always retain the registered ownership of the property. The percentage of the property that is sold to Homesafe is agreed at the outset of the transaction. This means that one of the benefits is, say 30% of the home is the relevant percentage then the customer knows that there will always therefore be 70% of the value of the property available when they die to be passed on to their beneficiaries, no matter how many years pass.
What sets them apart?
Another difference with the Homesafe system is that the customers do not have to make any repayments to Homesafe during the life of either of the customers. Homesafe only needs to be repaid once all of the original customers have passed.
In the meantime whilst the customers, or one of them, is still alive the homeowners are able to move out of the home if they want and rent it out AND they can keep the rent they so obtain and do not have to pay it to Homesafe.
After the last of the customers passes away, there is then a timeframe allowed for that person’s Estate to be processed and, for instance, the property to be sold or the beneficiaries to refinance the amount owing to Homesafe and keep the property so that Homesafe can then be paid out.
Homesafe charge interest on the amount of money originally provided to the customers, and that interest continues to accrue until the customers have died or Homesafe is otherwise paid out. However, if the amount that is owing, including the interest exceeds the agreed percentage of the then value of the house, then Homesafe will accept the lower of the two calculations.
One of the other features of Homesafe is that it is possible to make a second or subsequent further application to obtain money after the first amount has been paid to the customers.
If you are thinking of obtaining funds via Homesafe Wealth Release, we are ready to provide you with knowledgeable advice about the transaction and assist you with the documentation involved. Indeed, Homesafe have a rule that requires all customers to have obtained independent legal advice before Homesafe will advance any money to the customers.
Over the years we have dealt with many customers who are obtaining access to funds from Homesafe. The documents involved in the transaction are unlike the documentation for any of the other so-called Reverse Mortgage transactions. In fact, it is probably the case that most legal firms would have not had any, or hardly any, contact with the Homesafe Wealth Release product and contact with the documentation involved. Our significant experience with these types of transactions means that we are very familiar with the documentation and are able to provide proper advice to any persons who are thinking of obtaining money via the Homesafe Wealth Release system.
Written By Bruce Coode.