The Features of Equity Release

As a member of the Equity Release Council, we only recommend equity release products that meet all the Equity Release Council’s product standards. The Equity Release Council represents the equity release sector. Existing to promote high standards of conduct and practice in the provision of and advice on equity release which have consumer safeguards at its heart [1]. Let’s take a look at the features of Equity Release.

A fixed (or capped) interest rate for life

For Lifetime Mortgages (when considering the features of Equity Release), 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.?

The right to remain living in your home for life

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.?

“My house had been up for sale for some time with no interest. The truth was I never wanted to sell it in the first place. I had spent lots of money on it over the years, the garage was set up as my workshop and it was my home. Paying off the mortgage has made me stress free now. I have extra spare money to spend as I want. It has lifted a weight off my shoulders, left me much more at ease to get on with my life.” – Mr L

The right to move the plan to another property (lender criteria dependent)

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 right to make voluntary penalty-free partial repayments

All customers taking out new plans which meet the Equity Release Council standards. They must have the right to make penalty free payments, subject to lending criteria.

In March 2022 the Equity Release Council introduced a fifth standard. To help equity release customers manage later life borrowing costs and an addition to the features of Equity Release. The fifth standard allows ‘The right to make voluntary penalty free partial repayments’ with no commitment to having to make any payments.?

This provides customers the opportunity to choose whether they want to make any payments. And if so, how much, and when and how often. Typically, the maximum amount that can be paid back each year is around 10% of the original amount released. However some lenders do allow more than 10%.

A no negative equity guarantee

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.?

Read the full article here.

About Retirement Solutions (UK) Ltd - We are a UK-based firm that specialises in equity release and retirement planning. Established in 2007, we provide independent, whole-of-market advice, meaning they aren't tied to any specific providers. This allows us to offer tailored solutions to our clients, focusing on various retirement products, including equity release and estate planning.

We are a proud member of the Equity Release Council, which sets standards for equity release products and advice, ensuring client protection and transparency.