Shared Growth Plan

With this plan, part of your property is transferred, in return for a tax-free cash sum, which you may spend as you choose. Repayment is made from the future value of your home at the time of your death or if you decide to sell up permanently. The future value of your estate will be reduced by our agreed share of the sale proceeds of your property.

Please note that this is only one example of how these plans work, for information purposes. There are other methods which may suit you better. You should take professional financial advice in this area. A family meeting may be suggested. Surrey Financial Advice is here to help. Remember, with Surrey Financial Advice, any initial consultation is free of charge (apart from a cup of coffee, perhaps) and you are under no obligation to proceed. [Contact Us]

Questions and Typical Answers: (The answers will vary depending on the lender)

Who is eligible for the Shared Growth Option?

A Shared Growth Plan can be arranged for either one or two people, who own and live permanently in their own home, which is located in England, Scotland or Wales. Plans are available to couples, sisters, friends etc. who hold their title in joint names.

Single applicants must be at least 65. Joint applicants must have a combined age of at least 130.

The property must be in sound condition, of standard construction, and worth at least £60,000.

Leasehold properties are acceptable, provided the lease has at least 90 years left to run.

Between 30% and 90% of the property value may be used for the Plan.
If there is an outstanding mortgage or charge, it must be low enough to be repaid from the cash sum expected at completion, unless cleared earlier from other funds.

Commercial property, freehold flats, sheltered (or wardened) units, prefabricated or mobile homes are not acceptable. All other types of property are subject to the bank being satisfied as to the nature and condition of the property and its ownership.

How much cash can be released?

This will depend on your age(s), your property value and the percentage of ownership you wish to transfer. The older you are the higher the benefit you will receive from the percentage transferred. We will be happy to let you or your advisers have a personal illustration.

Could further cash sums be arranged?

You may apply to have a further cash lump sum at any plan anniversary, provided at least 3 years have passed since the last transfer took place. At this time the lender will take into account:

Whether the property has been satisfactorily maintained.
The lending criteria at the time of application.

A surveyor will re-value the property at your expense, and a further proportion of the equity will be transferred to fund the extra cash payment. You will be responsible for all your legal fees and costs (including a local search fee.)

What happens if I decide to move out permanently, for example into a residential home or to live with relatives?

If you decide to move out permanently, the property should be released back so that the lender may arrange the sale for you.

Respective solicitors will be asked to co-operate, to make sure that each party receives the appropriate share of the sale proceeds

What about moving house?

You will be free to transfer your plan to a new home of your choice, as long as it meets the criteria, and provides adequate security for the Equity Release Plan.
If when you move, the new property's value is lower than the original, you will receive your appropriate share of the surplus made on the sale.
If the new property's value is higher, you must be able to find an additional amount from your own funds. The lender’s percentage of ownership will be reduced as appropriate.
Naturally, you will be responsible for any costs related to the transfer, including all solicitors' fees for work, which they will need to carry out (even if the move falls through).

What would happen to the plan on marriage (or re-marriage) in the future?

If a single planholder married it may be possible to revise the terms of the plan to give the new partner a right of occupation. The lender reserves the option to charge a rent for this right. The new occupant would need to meet the age requirement for the plan and, if younger than the planholder a review of the scheme would be necessary. This would be calculated by taking into account the percentage of equity already transferred at any time.

If a right of occupation was not required, the new partner would have to sign an agreement to vacate should the planholder die or move out permanently. The planholder would be responsible for legal fees incurred in either of the above events.

What happens if the property is vacated, or I die?

You must advise the lender in writing if you anticipate leaving your property unattended on any occasion, for an extended period. If you wish to go on a long-stay holiday, or need a term of hospital care, for example, we will need to be aware of the expected length of your absence. They will also ask for your assurance that the property will be adequately secured during that period.

When you vacate the property or die your house should be cleared so that it can be formally released to the lender. They will normally arrange marketing, and their solicitors will handle the sale, by liaising with your solicitors. The selling price will be mutually agreed and their solicitors will make sure that the proceeds are correctly divided when received.