Equity Release Schemes in 2022: Independent Advisers or Direct Providers

Independent Advisers vs Direct Providers — Which Should You Go For?
Contributors: Nicola Date, Katherine Read. Reviewed by Francis Hui
Equity Release Schemes Are Designed to Be a Lifelong Commitment, so It’s Important to Take Into Consideration Whether You Should Select an Independent Advisor or a Direct Provider. And in This Article, We’ll Tell You Just That!

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Are you wondering if you should consult independent advisors or direct providers for equity release?

Are you considering joining the 1000’s before you who opted for equity release, but don’t know who to turn to?

Fear not; there are experts who can guide you through the process, finding you the best opportunities for you and your family.

The million-pound question is: do you opt for an independent financial adviser or a direct provider who offers advice?

We’ve got the answers.

Through this article, you’ll discover:

  • The difference between an independent adviser and a direct provider.
  • What to look out for when finding a financial adviser for equity release.
  • Essential questions to ask your adviser.

Our expert team has reviewed over 200 equity release plans and determined how to find the best possible route to the top plans.

Here’s what we found!

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What are Independent Financial Advisers?

Independent financial advisors (IFAs) are professionals who give independent advice on financial issues and guide their clients towards the best available financial products on the market.

When it comes to releasing equity from your home, it’s essential to hire a financial adviser that specialises in equity release products.

What are Direct Providers?

A direct provider is an equity release lender that offers advice along with your equity release product.

They will select a plan for you, based on those available through that particular lender.

Should I Choose an Independent Financial Adviser or a Direct Provider?

You should generally opt for an independent financial adviser when looking for equity release advice.

This is because they have access to the entire equity release market, instead of only parts.

This way, you can holistically analyse every plan you qualify for in the UK to determine the best course of action.

8 Things You Want to Consider When Looking For an Equity Release Adviser

As you now know, getting proper equity release advice is essential for those considering releasing some of the cash tied into their houses.

Here are some criteria to look for in an equity release adviser:

1. Are They an FCA-Regulated Equity Release Adviser?

First, make sure that they are regulated by the Financial Conduct Authority1 and are qualified to provide equity release advice.

It’s perfectly acceptable to ask your potential adviser about their credentials.

2. Are They Able to Offer Advice About the Entire Equity Release Market?

Check to see if the equity release adviser is a whole of market and independent adviser.

This means they have access to all current equity release plans and aren’t limited to a small number of products or a few suppliers,

Ensuring you don’t miss out on a plan that could be appropriate for your needs.

3. Can They Provide a Face-to-Face Equity Release Consultation?

Make sure your equity release adviser can provide you with face-to-face assistance if a digital consultation is not your scene.

Deciding to release funds from your house is a big one, and it isn’t easy to go over everything in depth over the phone.

In addition, during COVID-192 times, you might also want to check if they offer virtual consultations.

4. Are They Willing to Include Your Family in the Advisery Process?

Make sure your adviser promotes your family’s participation and is willing to include them in your face-to-face meetings.

It’s critical to discuss equity release with your family, and you should never be deterred from doing so.

5. Can They Give You a Free Initial Consultation With No Obligation?

A competent equity release expert will provide a free, initial no-obligation consultation,

During which you can learn if you qualify for a lifetime mortgage or a home reversion plan, as well as how much money you could release.

6. Can They Help You Examine All Alternatives to Equity Release?

The greatest equity release advisers will always inform you about the equity release alternatives, such as grants, benefits, traditional loans, savings, and other options.

They will only advise you to apply for a lifetime mortgage or a home reversion plan if it is the best option for you and your family.

7. Have They Garnered Any Awards in This Field?

If your adviser has earned an award for the quality of their guidance, you can rest assured that you are in good hands; look for award badges on their website or literature.

8. Are Their Plans Compliant to The Safe Home Income Plans (SHIP)?

Select an equity release adviser who only suggests SHIP-approved programs or those that offer the same assurances.

You may rest assured that you will never lose your home or owe more than it is worth.

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6 Questions You Should Ask Your Equity Release Adviser

How do you know whether you’re getting good financial advice and what to look for in an equity release adviser?

Asking your adviser some questions and testing their knowledge in the equity release sector is a smart place to start.

1. Do You Provide Advice on All Types of Equity Release Options?

A home reversion plan and a lifetime mortgage are the 2 primary types of equity release plans now offered.

By asking this question, you should determine whether they are affiliated with a certain lender or provide recommendations based on the entire market.

The more lenders they work with and the more programs they offer, the less shopping around for the best bargain you’ll have to do!

2. What are the Expenses of an Equity Release Plan?

There are several fees to consider from various sources when considering an equity release strategy.

Lender Fees

  • A one-time valuation fee that is almost certainly non-refundable.
  • An arrangement fee may be added to the loan amount, but it may also be subject to interest.
  • Interest will be charged on a lifetime mortgage. The interest will roll-up if it is not serviced, which means the amount of interest charged will increase year after year.

Solicitor Fees

  • For an equity release plan to be set up, you must first get legal counsel from your solicitor3.

Equity Release Adviser Fees

  • A one-time cost that is almost certainly non-refundable.
  • A completion fee is typically charged for advising and securing financing.

3. Is the Equity Release Council Going to Protect Me?

It’s critical to know if any equity release plan your adviser considers is offered by a member of the Equity Release Council.

Their regulations include:

  • Interest rates on lifetime mortgages must be fixed or capped.
  • You must have the right to live in your home for the rest of your life or until you need permanent care, as long as it is your primary residence and you follow the terms and conditions of your contract.
  • You have the option to move to another property, as long as it’s accepted by the lender as collateral.
  • A no negative equity guarantee must be included in the product so additional debt on the loan, after the sale of your home, will be written off.

4. How Do You Decide Which Plan is Best for You?

Your adviser should keep you informed and be transparent about their thoughts and decision making processes.

PRO TIP: Check that they will provide a suitability report. This is a document that details the advice you’ve received.

5. How Much Can I Borrow On an RIO?

RIO stands for retirement interest-only mortgage.

Unlike equity release, RIO mortgages require mandatory monthly interest payments to be made, stopping the interest from compounding.

The loan amount is only covered when the last homeowner dies or goes to long-term care.

Any certified equity release expert will also be able to provide RIO advice.

Find out whether yours is aware of them and willing to provide them as part of their service.

6. How Do You Decide How Much Initial Advance and Reserve I Should Have?

The initial advance refers to money that you will receive right now.

A reserve facility is a set amount of money that you can borrow from the lender in the future.

It’s ideal to release just enough money to cover any expenses you expect to have in the near future.

Any funds you anticipate needing in the medium to long term should be put into a reserve account.

Common Questions

Why You Should Seek Equity Release Advice?

How Much Does an Independent Financial Advisor Cost?

Is There No Way to Release Equity by Going Direct?

How Much Do Equity Release Advisors Earn?

In Conclusion

While direct providers who are Equity Release Council members are always safe and efficient, contacting a whole market financial adviser gives you access to the entire industry.

This means that your adviser will be able to find you the best plan available on the market.

After all, equity release is a useful technique for releasing funds from your house in retirement.

With equity release uses being endless, you’re bound to enjoy the retirement you’ve always dreamed of, whether you go with independent advisors or direct providers for equity release.

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Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

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