Equity release advice

You can seek financial advice from one of our independent equity release advisors if you’re considering taking out an equity release product. All advisors who advise equity release plans must be qualified in their field.

• Regulated firms and their agents are placed on the FCA Register and have to meet certain standards.
• Find an adviser with an equity release qualification
• the Equity Release Council member directory – the Equity Release sector’s trade body Equity Release sector’s trade body. All equity Release adviser in Mortgage Saving Experts are members of the Equity Release Council

Things to Remember:

All companies that sell equity release products are required by law to provide you with advice.

This entails determining if equity release is appropriate for you and, if so, only recommending a product that meets your needs and circumstances.

If the advice you were given turns out to be unsuitable for you, you can file a complaint with the Financial Ombudsman Service. Often double-check that the company you’re working with is on the FCA Register.

If they aren’t, you won’t be able to have any protection from the Financial Ombudsman Service or the Financial Conduct Authority if anything goes wrong.

Some lifetime mortgages require you to pay the loan’s interest and/or a portion of the principal each month.

Since this is such a complicated area, it is now required that homeowners obtain independent legal advice, which must be obtained in person.

Information you should receive

Step 1

When you contact a service provider or adviser, they must provide you with details about the services they provide.

This may be done orally or in a written form during the initial conversation.

In either case, they must confirm that they are giving you advice and state if they will:

• charge you a fee.
• Offer lifetime mortgages, home reversion plans, or both.
• Offer equity release schemes from the whole market or a limited range of providers.

Use this knowledge to shop around for the service you want at a price you are comfortable with.

Step 2

The lender or advisor will send you a mortgage example document after they have made a decision.

This paper can be referred to as the Key Facts Illustration by them (KFI).

When recommending a mortgage, some mortgage advisers and lenders can send you this information.

These documents will provide you with a personalised illustration that will include information such as:

• Any additional features.
• The service you’re getting.
• What happens if you don’t want the mortgage or plan any more.
• The overall cost of the scheme, as well as any fees you’ll have to pay.
• A description of the scheme, which the provider is and, for a lifetime mortgage, the interest rate deal.
• What you’ve told them about how much you want to release and the type of scheme you’re interested in.
• Where a lifetime mortgage requires regular payments, how much they would be if interest rates went up – so you can see whether you think you could cope with the increase.

Make sure you read and understand this document, and if anything is ambiguous, ask the provider or advisor to clarify it to you. It should outline the terms of the scheme that has been recommended, as well as any means-tested benefits that you might be eligible for.

This document can be used to shop around and compare similar plans from different providers.

Step 3

Once your application has been approved, you or your adviser will receive an offer document.

It will include details such as:

• The fees
• Your name and address
• The amount you will receive, or
• Any special conditions such as clearing any outstanding mortgages.

Be sure to read it carefully.

Helpful Tips about Equity Release

We’ve compiled a list of tips to help you get the most out of your equity release quest. These hints illustrate some of the considerations you’ll need to make when considering this path.

2. Consider all the alternative solutions available

The decision to take equity out of your home should not be taken lightly. You may be able to remove the need for borrowing or reduce the amount you need to borrow by considering your options.

Any reduction in the sum you release could result in a major reduction in the plan’s long-term cost and give you access to better offers with more flexibility.

The most common alternatives considered are:

• Downsizing – selling and moving to a cheaper property.
• Borrowing from family or friends
• Using existing savings/investments
• Claiming all available welfare benefits, such as pension credit
• Home improvement grants

3. Only borrow what you need

Make a full list of your upcoming expenses. You do not want to pay interest on money that you do not require.

If you think you’ll need more money in the future, ‘flexible drawdown’ plans will help you get more money when you need it. This means you’ll only be charged interest on the money you’ve borrowed. Borrowing money in instalments rather than in one lump sum will save you a lot of money.

4. Think about paying the associated interest charges

If you can afford it, paying the interest on a monthly or annual basis is the most efficient way to manage any release expense. Many plans allow you to control your interest by making monthly payments or making overpayments.

Even if the full interest rate is unaffordable, partial repayments or overpayments will greatly reduce the expense.

5. Don’t judge a plan on interest rate alone

Although a low-interest rate is significant, you should also think about how your strategy will achieve your long-term goals.

Some of the questions to ask when choosing a plan include:

• Can the plan be repaid early, and are there any early repayment charges?
• Can you borrow additional funds in the future, and what costs would be involved?
• Can the plan be moved to another property?
• Who will own the property?
• Is the plan regulated by the Financial Conduct Authority?
• Does the plan meet the standards set by the Equity Release Council?

Any plan you choose must satisfy your immediate needs while still being adaptable to accommodate potential life changes.

6. Involve family members or a trusted friend

You are not required to do so, but we strongly advise that you discuss your plans with your family. If you choose not to include them, you can inform them that any potential inheritance will be diminished or eliminated.

If you don’t want to include family members, talk to a trusted friend about your plans.

7. Don’t proceed without impartial financial advice

Seek advice from our knowledgeable and professional advisors who can access all of the available plans and providers. This ensures that all choices are taken into account.

8. Choose an experienced solicitor

You must obtain impartial legal advice from any Equity Release solicitor. Ensure your preferred solicitor has experience with equity release and, preferably, settle on a fixed legal fee. Your solicitor would gladly refer you to a specialist solicitor.

9. Think carefully before borrowing money to invest

We will advise caution when releasing equity to make investments. Always seek professional advice, and keep in mind that your investments’ value will go up as well as down.

10. Consider the impact any borrowing may have on your entitlement to means-tested benefits

Having money in the bank that you don’t need could jeopardise your ability to receive benefits in the future. Our advisors will conduct full benefits review to ensure you’re receiving the maximum amount of benefits available and to determine the effect of any borrowing on your current and potential entitlement.

An interest-only lifetime mortgage, a lifetime mortgage, or a home reversion plan can be included in this scheme.

Why choose us for equity release?

• Free: We don’t charge you for our consultations. There aren’t any hidden fees
• Unbiased: Our advisors don’t work to sales targets or bonuses
• Specialist: We offer advice to all, from managing debts to those looking to retire
• Trustworthy: In 2019, 98% of our clients said they would recommend us to family or friends*

Other organisations that can help

If you’re struggling to make ends meet and are looking for financial help, some several agencies and charities provide free information and advice.