Equity Release safeguards
When it comes to equity release you may be wondering “Is this right for me?” or even “Is equity release safe?”.
We are members of the Equity Release Council, which exists to promote high standards of conduct and practice in the provision of, and advice on, equity release and which has consumer safeguards at its heart. All members of the Equity Release Council must ensure the products they offer meet all five of their standards.
A fixed (or capped) interest rate for life
With a lifetime mortgage, which is the most popular type 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
With a lifetime mortgage, you still own your home and have the right to remain in your property until you die or go into long term care. This is provided the property remains your main residence and you abide by the terms and conditions of your contract.
The right to move to another property
You will have the right to move your equity release plan to a new property, subject to the property being acceptable to your product provider as continued security for your equity release loan.
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.
The right to make voluntary penalty-free Payments
In March 2022 the Equity Release Council introduced a fifth standard to help equity release customers manage later life borrowing costs. The fifth standard allows ‘The right to make voluntary penalty free partial repayments’ with no commitment to having to make any payments.
This gives you the freedom to choose whether you want to make payments or not, and 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.
What to Consider
If you’re considering releasing equity from your home, there are a few things to consider:
- The money released from your property, along with any interest accrued, will need to be paid when you die or go into long-term care.
- You will be required to receive financial advice before deciding to go ahead with the equity release.
- Consider your alternatives, equity release isn’t always the best choice for everyone.
- Consider speaking to family and friends before making a big financial decision.
- If you are entitled to means-tested state benefits, you could be affected when releasing equity from your home. An independent adviser will be able to advise on this in more detail.
Independent equity release advice
We represent independent advice in the equity release sector and aim to promote a high standard of conduct and practice in the provision of equity release advice. We have a growing team of locally based independent equity release advisers who are dedicated to helping you.
