Anyone considering releasing equity from their home should feel reassured that the industry is highly regulated and has legal standards that its products and advisors must meet.
When you begin the process of looking for the right equity release product for you and your financial situation, always check that the provider is a member of the Equity Release Council (ERC). The ERC is a voluntary body which ensures that consumers are protected through every step of the process of releasing equity.
Here are some of the standards equity release products must meet.
- For lifetime mortgages, interest rates must be either fixed, or, if they are variable, there must be a maximum interest rate for as long as the scheme lasts.
- You must retain the right to stay in your own home for the rest of your life or until you move into permanent, long-term care. Your home must remain your main home and you must keep to the terms of the contract for this to apply.
- You are allowed to move to a new property as long as your equity release firm agrees that it’s suitable as security for your loan.
- A product should come with a no negative equity guarantee which means your estate will never owe more than the property is worth when it is sold
- ERC members must make sure that you have received independent legal advice before you commit to an equity release scheme. The solicitor should also be an ERC member.
It is also the responsibility of an equity release adviser to make sure you are aware of what your plan involves, the advantages and disadvantages of equity release and the terms and conditions.
You should also be informed about the costs involved in setting up the plan, how it affects your tax and benefits and how changing house prices may affect you.
:: Use our Equity Release Calculator to work out how much cash you could release.
It is important to take expert advice on equity release before deciding whether it is right for you. Contact us to find out more from one of our highly trained advisors.
