Equity Release Jargon Buster

Annuity
An annuity converts a lump sum into income which is taxed.

APR
Annual percentage rate – the APR includes important factors such as:

• the interest rate you must pay;
• how you repay the loan (length of loan agreement [or term], frequency and timing of instalment payments and amounts of each payment);
• certain fees associated with the loan; and
• certain compulsory insurance premiums (for example, payment protection insurance).

Arrangement fee
A commitment or administration fee usually payable to the lender to reserve the mortgage funds.

Buildings insurance
Insurance to cover the cost of repairing or rebuilding your home if it’s damaged or destroyed.

Early Repayment Charge (ERC)

Generally lenders will apply an early repayment charge to your lifetime mortgage, much in the same way as any previous mortgage incentive rate you may have had previously. This could be for a set period, say 8 years, for example or for other types of plans, could be for the duration of your lifetime mortgage plan, depending on your circumstances and our qualified experts will be able to advise on the most suitable route for you.

There are NO early repayment charges when your lifetime mortgage is repaid upon the death of the second applicant(if a joint lifetime mortgage) or if/when you permanently move out of your home, for example if you were to require long term care.

Equity release
A way in which you can benefit from the value of your home without having to move out – by borrowing on it or selling all or part of it for a lump sum.

Home reversion plan
You sell all or part of your home to a third party in return for regular income and/or cash lump sum and continue to live in your home for as long as you wish.

Interest-only mortgage
You take out a loan on which you only pay the interest back each month. You do not pay off any of the capital. Instead, in a lifetime mortgage, the lender will be repaid by selling your home when you die or go into long-term care.

documents
Important information for you, set out in a standard way set by the FCA, so you can compare service, product and costs. Make sure you read them!