How am I protected with a lifetime mortgage?

Individuals over the age of 55 are increasingly looking to free up cash from their property and Equity Release plans are becoming more popular year on year. According to statistics released by The Equity Release Council (ERC) in their Autumn 2018 Market Report, equity release lending totalled £870 million in the first three months of 2018.

Equity Release has become a widespread financial choice among the over 55’s as a way to use their property assets to help meet their financial needs. The latest projections for the UK population, released by the Office for National Statistics in August 2018, suggest that in 50 years’ time the nation is set to have an additional 8.6 million people aged 65 and over. As a result of this broader demographic shift, later life lending is set to play a much larger role in the retirement landscape than it does even today. According to the Autumn 2018 Equity Release Council Market Report increased demand has been met by an increase in product options available for consumers and competition has in turn driven greater innovation with more flexible products coming into the marketplace with product options more than doubling in the last 2 years.

Anyone considering an Equity Release plan as a financial option to source wealth from their property can rest assured that Equity Release is fully regulated by the Financial Conduct Authority. Consumer protection is always available, providing peace of mind and the backing of the Financial Ombudsman should a complaint ever be made regarding equity release advice. All mortgage advisers recommending Equity Release schemes must hold a specialist qualification.

For additional reassurance, there is also the Equity Release Council (ERC). Originally launched in1991 as SAFE Home Income Plans (SHIP), the Equity Release Council is an organisation that is supported by the leading providers of Equity Release within the UK. It was created to promote safe Equity Release schemes and to safeguard the interests of homeowners.
The Equity Release Council works with the government to help make Equity Release a mainstream product, working to change the overall consumer outlook on the Equity Release market and driving membership of the Equity Release Council which is open to advisers, valuers and any industry professional that has an interest in the Equity Release market.
Members of the Equity Release Council agree to abide by a strict code of conduct, including:

• A no-negative equity guarantee to ensure that you will never owe more than your house is worth.

• The right to remain in your property for life or until you move into long-term residential care.

• The ability to transfer Equity Release schemes to another property without paying a penalty.

• For lifetime mortgages, interest rates must be fixed, or, if they are variable, there must be an upper limit or “cap” which is fixed for the term of the loan.

Please be aware that releasing equity from your property will reduce any inheritance in respect of your loved ones and could have an effect on any means-tested state benefits now and in the future.

Equity Release may involve a Home Reversion Plan or a Lifetime Mortgage which is secured against your property.