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Before we answer the question ‘can you get equity release with joint ownership?’, we will explain exactly what joint ownership is and how it works, as well as reference tenancy in common, which is a type of joint ownership that differs slightly.
The very short answer is that yes, you can get equity release with joint ownership, and it is very common for equity release consumers to do this.
In this article, we will go on to explain the consequences of doing this, as well as explain how you can make an application to an equity release lender if you jointly own your home.
Joint ownership is when two or more people buy a property together. Most married couples choose to be joint owners of their home, but you do not have to be married to obtain joint ownership.
Some friends and family members pursue joint ownership for various reasons.
If you joint own a property, you have equal rights to it. If your co-owner passes away, you would inherit their share of the property, so you would own it independently (1).
However, it is important to note that joint ownership can come to an end unexpectedly if your co-owner decides they no longer want to be involved.
In this situation, you would become tenants in common, and the co-owner’s share of the property could be given to someone else.
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Joint ownership is very common for married couples. When it comes to friends and family members, it is much less common to share a property, but it is becoming an increasingly popular option as the cost of living is rising and people are getting married later in life.
Previously, it was more common for people to get married young and share a home with their husband or wife.
However, nowadays, joint ownership can help unmarried people to afford to co-own a property, rather than losing money through rent each month.
Tenancy in common is a term used for when two or more people purchase a property together, and they agree to owning different percentages of the property.
They agree to own a particular share of the home, and this is recorded in a deed of trust.
Unlike standard joint ownership, when one owner passes away, their share of the property will go to their named recipient in their will. If they do not have a will, it will usually go to their next of kin.
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There are many similarities to joint ownership and tenancy in common, including:
In the current economic climate, many people cannot afford to buy their own homes, especially not without having a partner to share the mortgage and bills with.
Both joint ownership and tenancy in common provide an opportunity for people to co-own a property, whether it be with a partner, a family member, or a friend.
There is no obligation to stick with the scheme, so if your financial situation deteriorates, you can pull out of joint ownership any time you need to.
It is well known that there are many financial benefits to being married. However, this can be single people in a tricky situation as they try to manage the cost of living crisis alone.
The great thing about joint ownership and tenancy in common is that you do not have to be married, or even in a relationship, to get involved with these schemes. You can easily co-own a property with a friend or family member.
Despite what you may think, joint ownership is not reserved for married couples, and tenancy in common is not reserved for friends. Both schemes are accessible to everyone.
Whether you want to be joint owners with someone or to be tenants in common, the general rule is that you can only co-own a property with a maximum of three people. With you included, this means that up to four people can co-own property together.
A common approach to tenancy in common is to split the ownership for ways, so each tenant would own 25% of the property (2). This also means that each tenant would need to provide 25% of the deposit and the mortgage.
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It is important to consider the various differences of these schemes so that you can determine which type of agreement you currently have, or which type you would want to pursue in the future.
With joint ownership, you would always have to take out a joint mortgage with the co-owner. However, it is sometimes possible to take out a separate mortgage when you get involved with the tenancy in common scheme.
Tenancy in common without a doubt involves more administration than joint ownership. One example of this is that it is recommended to draw up a deed of trust in preparation for the property potentially being sold in the future.
You could reduce the amount of paperwork involved in tenancy in common by not drawing up a deed of trust. However, your share would not be protected, so it is always recommended to have a deed of trust.
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Yes, you can most certainly get equity release with joint ownership. Most people who are eligible for equity release are joint ownership applicants, as it is very common for people above the age of 55 to own a property with their husband or wife.
You would have to make an application to an equity release lender and inform them that you both own the property. This would allow you to have the same rights when it comes to equity release.
If you want to take out equity and your partner does not want to, you could file an individual application for equity release.
However, your partner would have to agree to this, with the awareness but their experience of equity release would not be the same as the experience of someone who made a joint application.
Some people are concerned that their partner’s bad credit history or low income could reduce their likelihood of being accepted into an equity release scheme. This is certainly something to consider.
However, most equity release lenders do not perform affordability checks as they are not only seeking customers with a high income and a great credit rating. Instead, they are looking for homeowners who have high-value properties, regardless of the amount of cash they have access to.
Something that is worth noting is that having a particularly good credit rating can make you eligible for certain bonuses with equity release. This means that your application may be more favourable if your partner has a good credit rating, or vice versa.
If you happened to pass away before your partner or enter long-term care before them, your partner would have to move out of your home and they would not be able to benefit from the remainder of your equity loan.
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Yes, you can get equity release with tenancy in common. However, there is less flexibility than there is with joint ownership equity release applications.
This is because it is not possible to make an individual application for equity release as a tenant in common.
Instead, you would have to make a joint application with the other tenant. If there are more than two tenants, only two of you would be able to make the application.
What’s more, the situation becomes more complicated when the equity release consumer or their tenant passes away.
The share of the person who passes away will go to the person they have named in their will. In the absence of a will, it would go to their next of kin.
This means that the surviving individual may not be entitled to continue to live in their property. It all depends on what the next of kin decides to do with their share of the home.
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No, you cannot release more money from your property if you make a joint equity release application.
The amount of money you will receive depends on the value of your property, the type of property you have, and your age. There being two applicants does not have any bearing on the amount of equity release funds you could be given.
Generally, the people who are most likely to release a large amount of equity release funds are people who are much older than 55 and own a very high-value property. These people are more likely to benefit from a higher loan-to-value ratio, whether they file an individual application or not.
With joint applications, the money is going to both people, so it is wise to to be mindful about what you are going to spend your equity loan on. This is because you will have less money overall if there is more than one person’s retirement to consider.
However, the vast majority of equity release consumers are in this position, and they manage to release enough money to change their retirement for the better.
What’s more, there is more chance that you will have a higher income when you are in a couple, whether this is due to having double the pension, double the savings, or double the eligibility for state benefits.
Some people have to give up their state benefits when they take out equity, so your benefits income will not necessarily continue to fund your retirement.
However, you may have been able to save up some money from receiving these benefits over the years.
Overall, we can safely state that you cannot release more money from a joint ownership property at the time of making an application.
However, when one homeowner dies after releasing equity through a joint application, the surviving partner can apply to borrow more money from the equity release lender. If there is any money remaining in a cash reserve, they may also be able to access this (3).
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If you own your property with more than one other person, either through joint ownership or tenancy in common, you will not be able to take out equity.
Equity release is only available to people who make single applications, or joint applications with one other homeowner.
The only thing you could do in this situation is to remove other people from your title deeds. However, it goes without saying that they would have to agree to this.
If one of the homeowners does not meet the requirements for equity release, the couple would have to either decide to not take out equity at all, or the other homeowner would have to make an individual application.
The main requirements for equity release relate to the property value and type. This means that most couples are eligible for equity release together, as they are applying to release money from the same property.
However, another requirement is that both homeowners are 55 years old or above. If your partner is not yet 55, you will either have to make an individual application or wait for them to turn 55 and then make a joint application.
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It is possible that you used an equity release product in the past and then got into a relationship, meaning your current partner is not on your equity release plan. If you are in this position, you could request for your partner to be added to your plan.
Some equity release lenders will allow you to do this, provided that your partner met the minimum age requirement for equity release at the time that you took out a plan.
For instance, if your partner is currently 65 and you took out a plan five years ago, they would be eligible as they were over 55 when you received your equity loan.
Please keep in mind that there may be a fee to add your partner to your equity release plan. This fee will be different depending on which equity release lender you are with, so you will have to speak to an equity release adviser about this.
If you took out equity with your partner, you shouldn’t have any problems when either one of you passes away or enters long-term care.
The equity release plan will continue for as long as at least one of the homeowners is alive and is not in permanent care. This means that the surviving partner would be able to live in the home for the rest of their life, as well as benefit from the equity loan.
When the final partner passes away or goes into care, the family is required to inform the equity release lender of the death.
The lender will then arrange for the property to be sold. They will take a set amount of money from the sale, in proportion to the amount the equity release consumers borrowed (including any interest).
Following this, the family will inherit the rest of the equity release funds.
They will most likely not be charged inheritance tax as the value of the estate will have been reduced as a result of equity release, and it will rarely reach the inheritance tax threshold of £325,000 (5).
However, if there is still enough value in the estate for it to meet this threshold, there will be a 40% inheritance tax applied to all of the inherited funds, which is what happens when someone hasn’t taken equity out of their home (6).
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It may be possible for you to take out equity if you have a leasehold property that you own with somebody else. However, the process may be more complicated, as the equity release lender needs to trust that they would be able to sell your house when you pass away or go into care.
If you do not have a long time left on your lease, you may be able to release equity by selecting an equity release lender that is willing to offer loans to people with leasehold properties. However, if there is plenty of time left on your lease, you may struggle to meet the lending criteria of an equity release provider.
You will need a minimum of 75 years left on your lease to be able to release equity from a joint ownership property, but many equity release lenders will demand a higher amount of years, so it’s a case of doing your research and finding a lender with a more flexible approach to releasing equity from leasehold homes (7).
Fortunately, most people are not in this situation, as only 25% of properties in the UK are leasehold (8). If you do happen to be in this position, have a look at our post on equity release and leasehold properties for more information.
We recommend speaking to an equity release adviser about taking out equity before ruling it out as an option.
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Yes, we would recommend releasing equity from a joint ownership property, as this is what many of our equity release clients do. If you take this route, there are a few things we recommend doing.
This suggestion may seem obvious, but we would never want you to make an equity release application when you or your partner is not eligible.
It takes around a week to process these applications, and you have to pay a small fee, so make sure you do the work beforehand in ensuring you both meet the landing criteria.
In terms of property value, you will only know the true value after a property valuation. However, make sure that your home has a value of around £70,000. If the estimated value is much lower, you are likely to be rejected by an equity release lender.
In terms of age, you must both be 55 years old or more. Check that the lender you are applying to does not have an upper age limit, as some of them do. You can always shop around to find an equity release provider with no maximum age restriction if you are in your 80s.
If it took you a while to convince your partner to release equity with you, you may think the struggle is over. However, you will now need to agree on which equity release plan you want to take out.
First, think about whether you would rather have a home reversion or a lifetime mortgage. We recommend having a look at each scheme in detail on our website.
Next, if you decide on a lifetime mortgage as most equity release consumers do, you will need to decide which type of lifetime mortgage you want to have. There are eight types, so make sure you dedicate enough time to making this decision.
If you cannot make your mind up, don’t panic. Speak to one of our equity release advisers and they will guide you on which equity release plan would be best for you and your partner.
It is always best to be honest with them about your financial situation so that they can predict how each equity release arrangement would affect your finances.
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Finally, if you own a joint ownership property, taking out equity is not the only way you can boost your finances. We encourage you to look at all of your options before making a decision, as we want you to select the option that is best for you.
Ask most married couples in the UK who have taken the joint ownership route, most schemes that are out there to help you with your finances are tailored to your situation.
One option is to downsize and moved to a lower-value home with your partner. This would not release a significant amount of money in the same way that equity release does. However, it would leave you with more money left over after paying the bills and mortgage, without the disadvantage of being in debt.
Another option is to use traditional loans as a way of bridging finance until you are in a better financial position. This may involve using credit cards to pay for short-term expenses. To do this, you would need to be earning a certain amount, and you would need to have a good credit rating.
Many homeowners rely on their state pension to fund their retirement, as well as any private pensions they may have. If you do not have significant employment gaps and you of state pension age, you could rely on your pensions like many others do.
It is always wise to check your eligibility for state benefits. It is possible that you could be claiming money from the government to help with your financial situation, and it is very easy to check whether this applies to you. Simply head to the government website and use the benefits calculator (4).
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It is not possible to take out equity from a shared ownership property. This is because you never own 100% of your property if you are on a shared ownership scheme.
All equity release consumers must own their entire property so that their equity loan can be secured against it, and their equity release provider will be able to sell their home in the future when they pass away or enter permanent care.
We hope this article has outlined but it is definitely possible to get equity release with joint ownership, and that in fact, this is what most people do.
As you have learnt, the situation will be slightly different depending on whether you have joint ownership or tenancy in common.
However, either way, you could release equity from your property. The main thing to consider is that you can only make an individual application if you have joint ownership, and that if you do choose to make an individual application, your partner must consent to it if they also own the home.
In terms of which types of property you can release equity from with joint ownership, the most common is freehold properties. If you want to find out whether it is possible to release equity from a leasehold property or from a retirement apartment, have a look at our respective articles on these topics.
To make an application for equity release with joint ownership, first book an appointment with one of our equity release specialists.
You will be able to ask them all of your questions about joint ownership with equity release and it will cost you absolutely nothing.
The adviser will be able to guide you through the application process and explain which sections you need to fill out (as they will be able to fill out some sections for you). This will involve asking detailed questions about your mortgage and finances, so prepare to get personal.
If your property is shared ownership, we are sorry to say that you will not be able to get involved with this scheme.
However, we can discuss alternatives to equity release with you to ensure you do not become a victim of later life poverty, or even just to ensure that you can enjoy your retirement as much as possible.
It may be possible for you to pursue an alternative to equity release for a short while, and then release equity at a later date.
For example, you could downsize and then release equity a few years down the line, you could rely on your pension for a while before taking out equity, or you could use your savings to pay off your debts and then release equity.
It is best to speak to a financial adviser about when you should really secretary, as it is sometimes more beneficial for you to do this as soon as possible. It depends on various factors, including your age, your income, and how much debt you you are in.
If you are interested in the free consultation that we mentioned, please input your details here, or call us on 0330 058 1579. Most of our equity release customers have joint ownership properties, so do not worry about being the exception.
That being said, if you happen to have stumbled across this article and you do not have a joint ownership home, you may also be eligible to release equity. We recommend getting in touch with us to find out whether this is the case.
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[1] Co-ownership of property: the difference between joint tenancy and tenancy in common https://www.netlawman.co.uk/ia/co-ownership-property#:~:text=Up%20to%20four%20people%20can,the%20resulting%20trust%20for%20sale.
[2] Buying a home with friends https://www.unbiased.co.uk/life/homes-property/tenants-in-common
[3]
[4] Benefits calculators https://www.gov.uk/benefits-calculators
[5] How Inheritance Tax works: thresholds, rules and allowances https://www.gov.uk/inheritance-tax#:~:text=There’s%20normally%20no%20Inheritance%20Tax,a%20community%20amateur%20sports%20club
[6] A guide to Inheritance Tax https://www.moneyhelper.org.uk/en/family-and-care/death-and-bereavement/a-guide-to-inheritance-tax Release on None Standard Construction, Timber
[7] Equity Release on None Standard Construction, Timber Frame & Other Types
[8] Should I be wary of buying a leasehold house? https://www.quittance.co.uk/conveyancing/advice/buying-a-property/should-i-be-wary-of-buying-a-leasehold-house
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