As a member of the Equity Release Council, we only recommend equity release products that meet all the Equity Release Council’s product standards. The Equity Release Council represents the equity release sector. Existing to promote high standards of conduct and practice in the provision of and advice on equity release which have consumer safeguards at its heart [1]. Let’s take a look at the features of Equity Release.
A fixed (or capped) interest rate for life
For Lifetime Mortgages (when considering the features of Equity Release), interest rates must be fixed or, if they are variable. There must be a ‘cap’ (upper limit) which is fixed for the life of the loan.
The right to remain living in your home for life
You must have the right to remain in your property for life or until you need to move into long-term care. Provided the property remains your main residence and you abide by the terms and conditions of your contract.
“My house had been up for sale for some time with no interest. The truth was I never wanted to sell it in the first place. I had spent lots of money on it over the years, the garage was set up as my workshop and it was my home. Paying off the mortgage has made me stress free now. I have extra spare money to spend as I want. It has lifted a weight off my shoulders, left me much more at ease to get on with my life.” – Mr L
The right to move the plan to another property (lender criteria dependent)
You have the right to move to another property. Subject to the new property being acceptable to your product provider, as continuing security for your equity release loan.
The right to make voluntary penalty-free partial repayments
All customers taking out new plans which meet the Equity Release Council standards. They must have the right to make penalty free payments, subject to lending criteria.
In March 2022 the Equity Release Council introduced a fifth standard. To help equity release customers manage later life borrowing costs and an addition to the features of Equity Release. The fifth standard allows ‘The right to make voluntary penalty free partial repayments’ with no commitment to having to make any payments.
This provides customers the opportunity to choose whether they want to make any payments. And if so, how much, and when and how often. Typically, the maximum amount that can be paid back each year is around 10% of the original amount released. However some lenders do allow more than 10%.
This gives you the freedom to choose whether you want to make payments or not. Because this is now an embedded standard within all Equity Release Council approved plans. You don’t have to make this decision at the time of taking out your plan. As the option will always be available to you.
This option may suit you if you want to reduce the amount of interest added to your loan on a regular basis. Or if you receive some money from another source such as an inheritance. The amount that can be paid back on a voluntary basis without penalty does differ from lender to lender
A no negative equity guarantee
The product must have a ‘no negative equity guarantee’. This means that when your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more.
Independent equity release advice
Always look out for the Equity Release Council endorsement mark when seeking advice about your equity release options. We are proud members of the Equity Release Council and as part of our commitment to you, our independent equity release advisers provide a fair, simple and complete presentation, and explanation of a recommended equity release plan. We represent independent advice in the equity release sector and aim to promote high standard of conduct and practice in the provision of equity release advice.
To book an appointment with one of our independent equity release advisers request a call back here, or call us on 0800 043 0725.
