You mention Equity Release to most people and all you hear is sharp intakes of breath and negativity! This perception has been carried over from the 80’s and 90’s, but is it still justified?
Well a lot has changed since the 80’s and 90’s, and a number of safeguards have been put in place specifically for consumer protection. Below is an outline of the main improvements made to ensure consumers understand and are fully protected:
All Equity Release products are regulated by the FSA. No Lifetime Mortgage or Home Reversion plan can be sold without advice by an Adviser with the additional qualifications and one specialising in Equity Release is preferred.
- Safe Home Income Plans (SHIP) is an organisation formed in 1991 to require product providers to offer certain guarantees to protect the older homeowner. The major change was the no-negative equity guarantee, so that when the property was eventually sold, the provider could not pursue the homeowner or their estate for more than the proceeds of the sale for repayment of the loan.
- You can move to a property with a higher value . First you must apply for an advance based on the value of that house.
- SHIP have put in place the right to have independent advice from a solicitor who must explain to you the product details, the consequences of taking it on and to make sure that the financial advice given is sound. He must then sign a SHIP Certificate to say he has done this.
- The Equity Release advance is Tax Free. The advice process pays special attention to the customer status so that any means tested benefits already received or the age related personal allowance do not adversely affect their current income. Some Lifetime Mortgages allow you to have a Cash Reserve from which to drawdown smaller sums whenever required, and this helps to both reduce the eventual balance of the loan and gives a boost to annual income without state benefit loss.
- “No inheritance will be left for my children” is a major fear. The latest products allow you to PROTECT part of the equity (value) in your property. The loan is guaranteed not to rise above an agreed level no matter how long the loan lasts and the part of the equity that is left can be passed on to the next generation.
The current economic climate has left retired people with fixed incomes and rising living costs but many are sitting on assets in the form of their property which could be used to ease their financial worries and make their lives more comfortable. Even towards the end of their days an Equity Release advance could help them to stay in their home by funding domiciliary care via a Long Term Care Annuity.
Coodes offers a fixed price Equity Release service – email firstname.lastname@example.org who heads the team at Coodes or call 01872 246200