Legal & General (L&G) Equity Release Review

At Equity Release Warehouse, we understand that there are so many different types of equity release plans throughout the market, that sometimes it can seem both confusing and intimidating.

One of the main lenders is Legal and General, and we have gone to the liberty of carrying out our loan Legal & General (L&G) equity release review for you so that you do not have to.

What is Equity Release?

Equity release is a type of loan and mortgage that allows you to gain access to the equity (money) that is currently built up and locked within your home.

The equity within your home refers to all of the monthly mortgage repayments that you have been making each month, along with the initial deposit that you put down on the property and house much the house is worth versus how much you bought the house for all those years ago.

When you release money from your home, you can gain access to your equity via one large lump sum (known as a lump sum mortgage) or a series of smaller and frequent payments (known as a drawdown mortgage). Alternatively, you can opt for a combination of both.

The great thing about equity release, and what makes it so popular to borrowers, is that you do not have to repay a penny of your loan until you pass away, not if you do not want to.

The equity release loan will be repaid once you pass away or move into long-term care. In this case, the property you currently live in will be sold and your next of kin will need to sell your house, usually within 12 months in order to repay the equity release loan [1].

At this point, it is worth mentioning that you will be charged interest on your loan from the moment it lands in your bank account. Interest on equity release loans is usually higher than they are when it comes to traditional mortgages, so will compound quickly. By doing so, your overall loan amount will increase.

This is why most lenders allow you to repay some of the interest on your loan whilst you are still alive, to avoid the overall loan amount reducing the amount of inheritance you are able to leave your loved ones.

Once your next of kin sells your property, they will have to use the money to pay off the loan (including any remaining interest on the loan). Anything that is left over is theirs for the taking.

Across the UK, there are two main types of equity release, which are both detailed and explained further below [1].

1. Lifetime mortgages

Lifetime mortgages are the most popular type of equity release across the UK, and are also the main type of equity release offered by Legal and General, as discovered during our Legal and General (L&G) equity release review.

With a lifetime mortgage, you do not have to repay anything until you pass away or move into a care home. However, you can opt to pay off some of the interest early if you choose to do so, to avoid the compound building up.

There are no restrictions on how you can spend your lifetime mortgage. Some people choose to spend their equity release loan on a holiday, a new car or some home improvements.

Other people might want to gift their equity release loan to their family or friends, to help with the cost of living, house deposits or University fees [1].

2. Home reversion plans

Alternatively, you can choose a home reversion plan. Home reversion plans are a lot less popular than lifetime mortgages.

With a home reversion plan, you have to sell a part of your home to the lender before they will release any money to you.

This means that by the time you come to sell your house after you pass away or move into a care home, the lender will also receive a percentage of the house sale, instead of your next of kin. Naturally, this reduces how much inheritance you are going to leave your loved ones.

When you choose to release money via a home reversion plan, it is always recommended that you speak to your next of kin and loved ones first so that they are fully aware of your plans and onboard with them [1].

About Legal & General

During our Legal & General (L&G) equity release review, we found that Legal and General have been operating since 1836 and have been based in London for the majority of that time, although they have employees throughout the whole of the UK.

Legal & General offer a range of different products, including home insurance, life insurance, pension investments and general financial advice.

Steve Ellis, the managing director of Legal and General chose to diversify their offerings in 2018, where they expanded the amount of plans and loans they offer. Now, they offer a range of different plans and loans to suit all needs and situations.

Since then, Legal and General started to work with a range of advisers to advise their clients on the different equity release loans that they offer.

Although these advisers will not charge you, they will only offer you advice when it comes to Legal and General loans, and not other loans offered by other lenders – even if these are better deals for you.

During the Legal & General equity release review, we discovered that all equity release loans offered by Legal and General will charge you interest on your loan, which you can choose to pay back or leave until after you pass away.

If you would like more information on equity release, then speak to the Equity Release Warehouse team, where our team of advisers will talk you through the process.

What do They Offer?

Legal and General offer a range of different loans when it comes to equity release in the UK. They have been offering financial services to people in the UK for the past 200 years and have been expanding ever since.

Legal and General specialist in lifetime equity release mortgages, as well as investments, pensions, life insurance and financial management.

When it comes to equity release, our Legal and General (L&G) equity release review uncovered that they offer lifetime mortgages to those aged over 55 years old.

How much equity Legal & General allows you to release from your home is based on a number of different factors, including how much your house is worth, how much of your mortgage you have already paid off, your age and your current state of health.

With Legal & General, you are allowed to receive your equity release in one large lump sum or through a number of smaller payments over an extended period of time.

Legal & General will also offer you inheritance protection as well as a no negative equity guarantee. The no negative equity guarantee ensures that your loved ones and next of kin won’t be left to pay off the debt.

Even if your house decreases in value and no longer covers the cost of the loan, they will not be left responsible.

In addition to this, our Legal & General (L&G) equity release review discovered that you must inform whoever is living in your house of your equity release plans.

This is so that they do not get any scary or unexpected shocks. If you do have a tenant or family member living in your house, then it is recommended by L&G that they seek independent legal advice.

With a lifetime equity release mortgage with Legal & General, you will also be allowed to move house in the future if you want to.

However, this would involve porting your mortgage to a new property, and this new property will need to meet your current equity release lenders qualification criteria.

Their Qualification Criteria

Our Legal & General (L&G) equity release review found that Legal and General have a number of qualification criteria factors when it comes to qualifying for their lifetime equity release mortgage.

For example, you will need to be aged over 55 years old and under 90 years old in order to qualify for equity release. Your house will also need to be based in the UK and worth at least £70,000.

During our Legal & General (L&G) equity release review, we found that Legal & General also has a maximum amount of £2,000,000.

Your house must also be based in England, Scotland or Wales. Your property is preferred if it is a freehold property, but they will also accept some leasehold properties if the remaining term is at least 175 years.

You are allowed to release a minimum of £10,000 with Legal and General.

If you want to release equity from your home then seek advice from Equity Release Warehouse before making any final decisions.

How Long Does Equity Release with Legal & General Take?

When it comes to equity release, each lender works differently and to their own time scales.

However, our research during the Legal and General (L&G) equity release review found that Legal and General say that they take anywhere between 8 – 12 weeks to process their equity release plans [2].

If you have bought a house in the past, then you will know that this amount of time is normal when it comes to processing a mortgage.

However, it is useful to know and understand why it takes this long. In order to do so, it is helpful to understand the process of equity release. During our Legal & General (L&G) equity release review, we found the following information.

1. Speak to an adviser

Before you officially apply for an equity release loan, you should get advice from an equity release adviser. They will be able to give you all of the initial advice and information that you need.

They will search the market for the very best deals, and use their equity release calculator to work out how much you can borrow in the first place.

2. Send off your application

The next stage is to send off your application form. Your adviser will help you to fill out your application form, as it can be quite confusing and intimidating to do on your own.

It is important that you fill out this form carefully and accurately and make sure that your adviser checks over your application form before you send it off to your chosen lender. On top of this, your lender will need proof of identity and proof of address.

3. House valuation

The third stage of the equity release process is a home valuation. During this stage, someone will arrive at your house to assess how much money they think your house is currently worth. They will look for signs of damage to your house, including any subsidence or environmental damage.

4. Mortgage offer

Once your house is valued, you should wait for your mortgage offer to come through via email and via the post. Your lender will send you your official offer which then needs to be signed and agreed on by an underwriter.

5. Engage a lawyer

By this stage, you will need to have engaged your chosen solicitor. They will act on behalf of you when it comes to dealing with the equity release lender and will draft up your contract for you.

6. Funds received

Finally, after 8 – 12 weeks have past you will then receive your equity release funds directly to your account. The funds will be sent to you via your solicitor and will of course be tax free.

If you want to release equity from your home but are curious as to how long it would take, then speak to the team at Equity Release Warehouse for more information.

How Much Will it Cost Me?

Taking out any mortgage will cost you some initial set up costs. It is important that you understand the true extent of these set up costs before you commit to your equity release application, as you might need to pay for some before you receive your loan, so it is important that you know that you can afford them.

Some of the initial set up costs are unavoidable and have a huge impact on how smoothly your equity release application and completion goes. These costs include the costs of arranging the application, the solicitor fees and the interest you have to pay on the loan.

1. Arrangement Fees

The arrangement costs are the initial costs that you have to pay when you apply for an equity release loan.

During our Legal & General (L&G) equity release review we found that these costs can add up to a total of £599 on particular types of equity release loans. However, some other loans and lenders will not charge you a penny during this stage

It is important to remember that the costs of these arrangement fees are usually added on to the total loan value anyway, so you do not have to pay for them right now.

2. Solicitor Fees

If you have ever bought a house before, then you will remember that you had to pay for a solicitor to help to arrange your mortgage for you and handle the fees.

Whilst these costs can seem annoying, solicitors will play a huge part of your equity release journey as they will write up your contract and handle the lender.

It is important that you choose an equity release adviser who specialises in equity release, so make sure that you do your research and your homework before settling and choosing your equity release solicitor.

During our Legal & General (L&G) equity release review, we discovered that the cost of a solicitor to handle your equity release plan differs a lot, depending on who you opt for. However, the cost of a solicitor usually sits anywhere between £1,000 and £2,000.

3. Interest Rates

It is also worth mentioning that when you opt for equity release, you will end up having to repay interest on your loan after you pass away and move into long-term care.

Depending on what the interest rates are looking like when you take out your loan, this can add up to a significant amount of money.

If you are thinking about taking out an equity release loan but are worried about the initial set-up costs, then speak to our team of qualified advisers at Equity Release Warehouse for more information.

Do I Have to Make any Repayments?

One of the biggest attractions to equity release loans across the UK is the fact that you do not have to repay anything until after you pass away. When you pass away or move into a care home, your house will be sold.

When this happens, your loved ones will need to repay the equity release loan you took through the proceeds of the house sale.

If there is anything left from the sale of your house after repaying the loan, then they will get to keep the remainder as inheritance.

However, as with every other type of loan or mortgage, interest is charged. However, as you are not forced to pay off interest when you take out the loan, lots of people choose not to pay off the interest on their loan.

This means that that interest then compounds into a larger amount, increasing the overall loan value.

This is why a lot of people choose to pay off some of the interest on their equity release loan as they go, whilst they are still alive. By doing so, they avoid compound interest building up and will also leave their loved ones more inheritance this way.

It is important to check whether your equity release loan allows you to make any repayments, as some loans do not allow people to.

During our Legal & General (L&G) equity release review, we discovered that there are a number of ways Legal & General allow individuals to repay some of their equity release loan early.

For example, you can choose to opt for optional repayments, which allows people to make partial repayments on a frequent or infrequent basis in an attempt to help to reduce the amount of interest that builds up on your loan.

Alternatively, you can choose to release equity through frequent monthly repayments.

This means that you will pay off a set amount of interest each month, on a set date. This gives you some control over any early repayments and also means that you will end up paying off a lot of your interest by the time you pass away.

Finally, you can also choose to pay back the full loan amount early – but this will most likely incur an early repayment charge.

How Can I Protect My Inheritance?

During our Legal & General (L&G) equity release review we found that all equity release loans with Legal & General benefit from inheritance protection. Whilst it is not mandatory on all equity release loans with them, it will always be given as an optional extra.

Inheritance protection on an equity release loan allows people the chance to protect certain protection of the sale of their house so that this money can be passed on to their loved ones as inheritance after you pass away.

In order to protect your inheritance further, during our Legal & General (L&G) equity release review, we found that Legal & General also recommend paying off some of the interest on your equity release loan whilst you still live, in order to ensure that you leave as much inheritance as possible for your loved ones.

Do They Have an Equity Release Calculator?

During our Legal & General (L&G) equity release review, we found that Legal & General do have their own equity release calculator, although this is very common for lenders and advisers across the board.

Equity release calculators are used to find out how much individuals are able to release from their home. However, this will only ever be an approximate estimate. In order to find out exactly how much equity you can release from your home, you will need to speak to an adviser and specialist.

If you want to know how much equity you can release from your home, then speak to one of our advisers at Equity Release Warehouse. Our team will be able to use our tried and tested equity release calculator.

In order to establish how much equity you can release from your property, expect your adviser to ask you a number of questions, including the following.

How old are you?
How much of your pre-existing mortgage have you already paid off?
How long have you been living in your house for?
How much is your property currently worth?

Legal & General Equity Release Review – The Benefits of Choosing Equity Release with Legal & General

During our Legal & General equity release review, we discovered a number of benefits to choosing equity release. The biggest benefit to choosing equity release is that any money you receive will be sent to your bank account, completely tax free.

You will also be able to stay living in your home for as long as you want, without ever being asked to move. During this time you will be free to spend your equity release money however you want to, and enjoy a more flexible and relaxing retirement and lifestyle.

Your inheritance will also be protected with inheritance protection, as well as a no negative equity guarantee, as determined by the Equity Release Council.

You also need to remember that you do not have to repay anything if you don’t want to. You can wait until after you pass away to repay some of your loan.

Legal & General Equity Release Review – The Pitfalls of Choosing Equity Release with Legal & General

However, during our Legal & General (L&G) equity release review, we found a number of disadvantages and pitfalls to equity release.

For example, choosing an equity release loan and choosing not to repay any of your interest will reduce the amount of money you leave your loved ones in the form of inheritance.

Interest on your equity release loan will also compound very quickly, as interest rates on equity release loans are higher than they are with other forms of mortgages. In addition to this, if you opt to repay some of your loan early then you might even be charged a fine for doing so.

Finally, when you take out an equity release loan, you will no longer be eligible for any means-tested benefits, either now or in the future.

Legal & General Complaints

During our Legal & General (L&G) equity release review, our team at Equity Release Warehouse researched how Legal & General deal with their complaints.

We found that Legal & General allows customers to make any complaints either over the phone, by letter or by email. In addition to this, any customers are also able to log onto their online Legal & General account, go to the My Account section and message them securely from there.

If you do have a complaint, then make sure that you give us all the relevant information we would need to pursue your complaint and case further.

If you would like to make a complaint about Legal & General equity release, then email their team at customerservices@landghomefinance.com. Alternatively, you can send a letter to Legal & General Home Finance, PO BOX 17225, Solihull B91 9US [3].

If you would like to complain to Legal & General by phone, then call them on 03330 048 444 between 9am – 5pm Monday – Friday.

If you are considering releasing equity from your home, then why not speak to the team at Equity Release Warehouse. Unlike most equity release advisers, we won’t charge you for advice, and all our advisers are fully trained and qualified.

Speak to a member of our team by calling us at 0330 058 1579 or by visiting our website on www.equityreleasewarehouse.com.

References

[1] https://nationaldebtline.org/fact-sheet-library/equity-release-ew/

[2] https://www.equityreleasewarehouse.com/help-centre/how-long-equity-release-takes/

[3] https://www.legalandgeneral.com/contact-us/