Equity Release

Lifetime Mortgages

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Mortgage and Financial Guidance Ltd can refer you to a suitably qualified professional in respect of Equity Release advice. Please call for details or e-mail for details.

The value of your home, minus any outstanding mortgage you may owe, can be described as your 'equity'. Equity release is the process of unlocking some of this value, turning it into a tax-free lump sum of cash. You could then use this to pay for one-off purchases, to improve your lifestyle or to help loved ones.

If you are a home owner aged 55 or over, you could be eligible to take advantage of releasing equity from your property. Equity release can significantly improve your financial situation, giving you a more comfortable retirement.

We are not authorised to provide advice for equity release products. This will be passed to a suitably qualified and authorised specialist. To understand the features and risks ask for a personalised illustration.

An equity release product will reduce the value of your estate, will not be suitable for everyone and may affect your entitlement to state benefit.

Depending on the adviser you are referred to there may be a fee for equity release advice the value of which will be confirmed at any initial meeting.

Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice

How it works

The lender gives you a lump sum (the equity released from your home). You pay nothing as the interest is ‘rolled up’ into the loan. The amount borrowed plus this interest is repaid out of the proceeds from the sale of the property after you die.

How much you can borrow depends on the value of your home and your age. The older you are, the higher the percentage of your property’s value you can borrow. Generally, you will not be advanced more than 50% of the value of the property. Most loans are fixed-interest, so reducing risk.

The Equity Release Council exists to promote high standards of conduct and practice in the provision of and advice on equity release.

Our members will –

Ensure that all their actions promote public confidence in equity release as a potential retirement solution
Act at all times in utmost good faith
Communicate high expectations for equity release outcomes in all their dealings
Ensure conflicts of interest are managed fairly and reduced to the lowest practical level
Exercise due skill, care and diligence in all that they do and uphold the standards set out by their professional bodies at all times
Always act with the best interests of their clients being paramount, treating customers fairly in all their actions.

Our provider and adviser members comply with the Financial Conduct Authority’s (FCA’s) rules governing the sale of equity release products. These rules include the requirement that all customers who buy equity release plans are fully advised by a qualified adviser.

In addition, our members have voluntarily adopted further safeguards. These are set out in our Rules & Guidance (which are available on our website www.equityreleasecouncil.com/standards/rules-and-guidance/) and are designed to give you confidence in our members and their products and services. These further safeguards include product standards and a requirement for all customers to receive independent legal advice when taking out an equity release product.

Product standards

Our product standards are set out below. Our members are only allowed to tell you that a product meets these product standards if it meets all of them. If you are offered or are considering a product that does not meet all of the standards, the product literature must explain which standards are not met, and give an illustration of the types of risk that this might pose for you.

Our product standards are as follows:

For lifetime mortgages, interest rates must be fixed or, if they are variable, there must be a “cap” (upper limit) which is fixed for the life of the loan
You must have the right to remain in your property for life or until you need to move into long-term care, provided the property remains your main residence and you abide by the terms and conditions of your contract
You have the right to move to another property subject to the new property being acceptable to your product provider as continuing security for your equity release loan
The product must have a “no negative equity guarantee”. This means that when your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more.

Independent legal advice

You may choose your own solicitor to carry out the legal work in connection with your plan. Before the plan is completed, your solicitor will be provided with full details of the plan, including the rights and obligations of both parties (you and your product provider) under the contract, should you choose to go ahead. Both you and your solicitor will be required to sign a certificate confirming that these rights and obligations have been explained to you and that you wish to enter into the plan.

Information about and explanation of your equity release plan

You will be provided with a fair, simple and complete presentation and explanation of your equity release plan. The benefits and limitations of the plan will be clearly set out, together with your obligations under the terms of the contract. You will be given information about:

all the costs that you will have to bear in setting up the plan;
the tax implications;
what will happen if you wish to move to another property; and
how changes in house values may affect your plan.