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.
Their crucial role is to promote a high standard of conduct and practice, in providing and advising on equity release.
The Equity Release Council has regulated these financial tools to ensure that the homeowner is protected and that only legitimate providers can offer equity release. This helps to dispel myths and gives homeowners the confidence to release equity from their homes safely.
The council’s members include equity release plan providers, solicitors, intermediaries, financial advisers, consultants, surveyors and other industry professionals.
Are you still wondering why the Equity Release council is important? Continue reading to find out more!
What You MUST Know
Before you continue reading, we’ve summed up what you need to know about equity release in this short video. Check it out!
What is the Role of the Equity Release Council?
The role of the Equity Release Council is to regulate equity release firms and protect the interest of the homeowner. 4 of their responsibilities include:
- Offering you all the information you might require on equity release and its products.
- They protect any consumer using equity release, and those who are considering releasing equity from their home.
- They raise awareness on how equity release might be an ideal option after retirement.
- In addition, they represent over 180 member firms and more than 500 people in the equity release industry, from financial advisers and lenders to representatives and surveyors.
The Council Regulates Legitimate Equity Release Providers
The Equity Release Council is there to help you recognise 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:
- The loanee has a right to remain in the habitation or property for life until they pass away.
- The 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. They then sign 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.”
Are you wondering what this means? Continue reading to find out!
What’s a “No Negative Equity Guarantee?”
This guarantee protects you so that your estate doesn’t have to pay more than what is owed 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. Any additional funds will be a part of your final estate.
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.
Got Questions? Check These Out First
Who Are the Equity Release Council?
The Equity Release Council is a trade body that regulates equity release schemes in the UK. It was established in 1991, and it helps create a secure environment for equity release consumers.
The ERC works with the UK government to assist in making equity release products mainstream. They also work to change the overall clientele outlook on the equity release market.
What Are the Product Standards Set by the Equity Release Council?
Some of the ERC codes and principles include:
- When it comes to lifetime mortgages, the interest rates should be fixed, or if they’re variable, there should be a cap (upper limit) set for the life of the mortgage.
- You have the right to continue residing in your home until the loan term ends, as long as the estate is your primary residence and you stick to the terms and conditions stipulated.
- You have the right to move to another house as long as the new estate is acceptable to your plan provider.
- All equity release providers should offer you the ‘no negative guarantee’ that protects you from paying more than the value of your home.
What Are the Equity Release Council’s Roles and Responsibilities?
Well, the ERC is responsible for various tasks, and some of these include:
- Providing you with the information you need on equity release schemes and the options available to you.
- Safeguarding the consumer that uses and those considering taking out an equity release scheme.
- Raising awareness on how equity release might be an excellent choice after you reach retirement.
- Representing more than 200 member companies and over 1,000 persons subscribing to the equity release products, financial advisors, lenders and even surveyors and their representatives.
Spending time on working out your finances and retirement plan can be quite draining. Fortunately, there is the Equity Release Council who is there to protect you, should you take the route to release equity from your home.
The council will help secure you and your heirs from spending too much money on interest and losing unnecessary cash.
You can get in touch with your financial advisor today to start your equity release journey.