You must know all the lingo to unlock equity with confidence!
If you don’t, you could end up being taken advantage of by dubious lenders and in a position where equity release was the biggest mistake of your life.
Don’t stress. We’ve got your back. Our comprehensive site has up-to-date information on all things equity release.
We’ll help you discover:
- What’s a Safe Home Income Plans
- The history of SHIP
- If they’re still relevant today
As experts in the field of equity release, our team spends countless hours researching all the latest market updates and product news. In addition, we delve into the history to give you a 360-degree picture of equity release.
Are you curious to know what a SHIP is? Find out now!
If you’ve never heard of Safe Home Income Plans, don’t worry, it’s an old term. Formed in 1991, it’s the original name for the governing body created to protect the once dodgy equity release industry.
In 2012 their name changed to the Equity Release Council1, the fantastic organization that still regulated the industry today.
The Pressing Need for Home Income Plans
Before the formation of SHIP, the equity release market was fraught with corruption, leaving many elderly homeowners in the dust, riddled with crippling debt.
In addition to preventing fraud, the body was developed in response to pensioner ‘investment’ schemes in the late 1980s. These risky schemes were structured so that equity was released from the property through a mortgage, and the capital was then reinvested into a bond or a similar investment.
This was initially intended to provide sufficient income to pay the mortgage and give the investor additional income. In principle, it could work if investment returns are high and interest rates low, but when the market slowed down and interest rates increased, investors suffered on several fronts, including:
- The value of their investment plummeted.
- The same happened to their investment’s income.
- Mortgage repayments increased drastically.
- The property value dropped, causing negative equity2.
- In the worst cases, homes were repossessed, and the investors were left owing more than the value of their property.
These schemes were fortunately banned in 1990.
Recapping the Role of the Equity Release Council
The Equity Release Council plays an active role in the industry, protecting all clients who release equity through a lender who holds a membership. Whatever you do, never release equity through a plan provider that’s not registered with the council.
While you can learn all the details about the council here, we’ll quickly recap their 6 main functions:
- You have the right to remain in the property for life until they pass away.
- To ensure no confusion occurs, you must be offered clear, concise paperwork that includes all setup bills and residence value changes.
- Your representative preference steers any legal work. You then sign a certificate stating that the plan has been clarified and that you comprehend the risks.
- You can move your plan to another property without penalties.
- An Equity Release Certificate defines the cost of your asset and estate.
- Equity Release carries a ‘no negative equity guarantee3’.
While they’re no longer know as Safe Home Income Plans, the Equity Release Council still very much exists and plays an active role in protecting the livelihood of homeowners across the UK.
Now more than ever, equity release is a safe solution to unlocking the key to your retirement dreams. In addition, with interest rates being at an all-time low, it could be a highly profitable way to live financially stress-free for the rest of your days.