Equity Release Council

But first…

A Quick Look at Equity Release

Equity release refers to your property’s items/parts that lets you access your money tied up in your house. However, you can only gain access once you’re 55 years or older. You can get the capital value of objects in your home as a lump sum or an income based on the house’s value. You’ll just need to repay that money you accessed at a later stage. There are 2 types:

#1. Lifetime Mortgage

The first type of equity release is a lifetime mortgage. This type lets you take out a mortgage on your home if it’s your primary residence. However, you will remain the owner. You’ll have the option to ringfence part of your property for your family to inherit. You can also make repayments or let the interest increase. Better yet, if there’s any loan amount or any accrued interest, it’ll be paid back when you pass away or need long-term medical care.

Now:

#2. Home Reversion

The second type is a home reversion, which means you sell some of your property or your whole property. You can sell it to someone like a home reversion provider, and they’ll pay you a lump sum for it, but they can also pay you in regular payments. It’s your choice.

Now, you might be wondering, and why do I need them?

Who Are the Equity Release Council?

The Equity Release Council is a self-regulated non-profit organisation that safeguards the interests of homeowners. They specialise in all things equity release-related. It was initially recognised as Safe Home Income Plans, or SHIP until it was re-launched in 2012 when it broadened its reach from equity release providers to financial advisers. Its roles include:

• Offering you all the information you might require on equity release and its products.
• They are protecting you, the consumer using or considering taking out an equity release.
• They are raising awareness on how equity release might be an ideal option after retirement.
• Representing over 180 member firms and more than 500 people in the equity release industry, from financial advisers and lenders to representatives and surveyors.

So why do I need the council to do that for me?

The Council Helps You Avoid Sour Providers

The Equity Release Council is there to help you recognize the equity release companies to avoid:

• Plan providers who don’t have a ‘no negative equity guarantee.’
• Lenders who aren’t members of the ERC.
• Providers who charge high interest rates.
• Lenders who charge you very high repayments and who charge them early.
• Equity release firms that give you large loan amounts before they even analyse your circumstances.

What’s Their Code of Conduct?

Its members also have to abide by a strict code of conduct:

• Loanee has a right to remain in the habitation or property for life until they pass away.
• Loanee will be offered clear, concise paperwork that includes all setup bills and residence values changes to ensure no confusion occurs.
• The consumer’s representative preference steers any legal work. Then he signs a certificate stating that the plan has been clarified and its clients comprehend the risks.
• The client can move their plan to another property without penalties.
• Equity Release Certificate defines the cost to the client’s asset and estate.
• Equity Release carries a “NO NEGATIVE EQUITY GUARANTEE.”

Now, let’s look at a no negative equity guarantee…

What’s a “No Negative Equity Guarantee?”

This guarantee protects you so that you don’t pay more than you owe to your equity release provider. However, when your lifetime mortgage plan comes to an end, the lender will sell your house and settle the loan amount plus any interest.

But let me tell you something:

If the estate market value decreases and the money can’t repay your mortgage, the lender won’t request more cash from your estate or heirs. Since you’ll be protected by the ‘no negative equity guarantee’, they aren’t legalised to do so. Therefore, consider the equity release company that will offer you this protection.

Common Questions People Ask Us

In Conclusion

Finances are always a bit daunting and tricky. But thanks to the Equity release council, your worries can be a bit less when it comes to equity release. Releasing funds from your property can be scary, but the council will help to protect you and your heirs from spending too much money on interest and losing money that you shouldn’t be losing.

Their code of conduct and rules help you to find the right equity release provider that won’t do you in. Ultimately, you don’t need to be anxious thinking about “Is equity release safe?“. It’s so much more improved than in previous years. You have all the information you need at your fingertips so that you can be at peace.