We’re seeing an increase in the amount information about Equity Release, in Newspapers and advertisements on the TV from providers such as Aviva and Legal & General, but is this something we should be considering, and if it is, where do we go to get the facts?
Perhaps there are two places to start. The first could be the Money Advice Service. This is an organisation which has been set up by government to provide free and impartial advice and they provide a useful booklet which explains the two main types of equity release schemes, Lifetime Mortgages and Home Reversion plans. They cover the options available along with things to consider.
The second option could be the Equity Release Council website. Here you will find not only a description of the different types of schemes but you’ll also see the standards that both lenders and registered advisers need to adhere to.
- With a Lifetime Mortgage, the interest rates must be fixed, or if a variable rate, there must be an upper limit or ‘cap’ which is in place for life.
- There must be a no-negative equity guarantee in place which ensures that when the property is sold, even if there is insufficient money left from the sale of the property to repay the outstanding loan then neither you or your estate are liable to pay any more.
- With a Home Reversion plan, you sell part or all of your home in return for a cash lump sum, regular income or both and when the property is sold, the company who provided the capital released will receive their share of the property. If you have sold all of the property to the home reversion provider, they will receive all of the sale proceeds.
- In both the Lifetime Mortgage and Home Reversion Scheme, you are able to remain in your property for the rest of your life providing the property remains your main residence.
So once you have the information, where do you turn to for Independent advice which will provide information and advice to meet your specific needs? You can look on the Equity Release Council website and by putting in your post code or by typing ‘The Right Equity Release’ in the ‘find an adviser section’, you will be able to locate an independent adviser who is local to you.
You can then have the confidence of knowing that our advisers maintain the expected standards of the Council which include ‘Always acting with the best interests of their clients being paramount, treating customers fairly in all their actions’.
By using an Independent adviser, they will be able to talk you through the wide variety of options available, cover the costs of setting these schemes up and explain the benefits of individual schemes along with discussing the best way forward.
Please remember that equity released from your home will be secured against it.