Are Equity Release Products Regulated?
Taking out an equity release plan is a big commitment, and not one which should be entered into lightly. Designed to free up cash during retirement, or from as young as 55 years of age with some lenders; releasing equity can be an option during a period of your life when money should be less of a worry, and you should be able to enjoy peace of mind.
People often misunderstand how equity release works, confusing the modern plans with less well designed ones from many years ago that let some borrowers down. Fortunately concerns that you may have over the safety of equity release plans have been addressed in 2 ways;
- The Financial Conduct Authority is the UK Regulator responsible for protecting consumers by ensuring that companies that offer equity release plans meet their standards and that financial advisors/specialists offering equity release advice are properly qualified, trained and supervised.
- The Equity Release Council (formerly called SHIP, formed in 1991) was established as a trade body with consumer protection at the heart of its operation. Although it isn’t compulsory to be a member, most equity release lenders, specialist advisors and even specialist solicitors are. The Equity Release Council requires members to adhere to a strict Code of Conduct and membership brings with it a number of crucial guarantees and safeguards to customers.
Amongst the Equity Release Council’s guarantees is the customer’s right to remain living in their property for the rest of their life or until they move into long term care. In the case of a couple, this applies when the second person dies or moves into long-term care, so that when their partner dies or moves into long-term care before them, they aren’t forced out of their own home.
A ‘No-Negative Equity Guarantee’ ensures that the amount owed upon the last borrower’s death or move into long-term care cannot exceed the value of the property. So if there is a shortfall (‘negative equity’) the family or beneficiaries of your estate will not inherit any debt.
Furthermore, the Equity Release Council requires that borrowers also appoint their own independent solicitor to act in their best interests. This provides a comforting extra layer of protection in addition to qualified specialist financial/equity release advice.
These safeguards are for your benefit, so it really is vital that you check that both the lender and advisor are members of the Equity Release Council before taking out a plan.
Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property and will reduce the value of your estate and impact funding long-term care. To understand the features and risks ask for a personalised illustration.
If you have any further questions about equity release products or simply wish to talk about your finances in retirement, the Age Partnership team will make you aware that equity release may impact the size of your estate and it could affect your entitlement to current and future means-tested benefits. For more assistance and information, visit their homepage or call their dedicated customer services team on 08080 555 222 .
We provide initial advice for free and without obligation. Only if your case completes would our advice fee of £1,895 be payable. Other lender and solicitor fees may apply.