For many retirees the realisation their emergency fund is becoming imminently exhausted can be a daunting prospect. Even more so, is the next decision is how to replace these funds, in order to maintain the lifestyle one is accustomed to.
An increasingly popular route for many people over the age of 55 is to consider a release of equity from their property. However, although equity release is a product more people are becoming familiar with, knowing where to turn for further information has proven an obstacle.
There may still be a stigma attached to the equity release industry which still has many people feeling cautious about where to turn to for advice. There are a number of resources available dependent upon how one wishes to pursue their route to market. An increasingly popular research tool is the internet with equity release websites.
Sites such as Equity Release Supermarket & Compare Equity Release offer a plethora of information on what equity release is, the various schemes available, maximum release calculators, the latest and best equity release deals. Letting the client conduct research in their own time is something these websites offer. They provide information on the basics of equity release and help build one’s knowledge about what equity release schemes are all about. Websites such as these are geared towards modern era of the ‘silversurfer’.
Other resources could include approaching the equity release trade body itself – the Equity Release Council where a list of competent independent equity release advisers can be found. The advisers would have been verified they are fully regulated by the FCA & possess the appropriate equity release qualifications to enable them to provide best advice. This will help you to find equity release advisers in your area to provide local advice.
The answer is a resounding ‘yes’.
Due to the nature of equity release & the impact a wrong decision could make, not only to the applicants, but also their beneficiaries, the Equity Release Council & providers all insist on any application being supported by financial advice. This will ensure that all types of equity release schemes have been discussed including the difference between home reversion plans and lifetime mortgages. Included in the conversation would be the coverage of the equity release pros and cons which will not only explain how equity releases can be a major benefit, but also the potential downside of the schemes features such as early repayment charges.
All equity release advisers must abide by the Equity Release Council Code of Conduct which incorporates five set principles. Additionally, all equity release advisers must have been trained to a set standard which will include passing the appropriate mortgage & equity release exams. These principles will have laid the foundations by which the advice process is aligned & implemented.
The whole purpose behind seeking advice is to ensure that equity release is the best option for your requirements. For instance, the adviser will run through all the alternative options, such as downsizing, using existing savings or even checking eligibility for means tested benefits to assess whether these could be more suitable. Equity release should always be considered as a solution of last resort.
Once all the alternative options have been excluded then work can then start on the equity release advice process. This will include the adviser arranging an appointment, either face-to-face or telephone based in order to gather information by completing a factfind of your current situation. They will explain their status, regulatory body; fee & charging structure & where to turn if a future complaint were to be made.
After the collation of this data, equity release advisers should then conduct their research from the whole of the equity release market to find the best deal which fits with your individual requirements.
The product features recommended could come from any of the following: –
1. The best equity release interest rate
2. The amount of tax-free cash required immediately
3. Whether any further cash may be required in the future
4. If you are likely to repay the scheme in the future
5. Would partial repayments or monthly repayments be required?
6. How much of an inheritance you would like to leave
7. Taking advantage of any special offers such as free valuations or cashbacks
Once prepared, the adviser’s recommendations can then be delivered using a Key Facts Illustration (KFI), which is effectively the equity release quotation. This document outlines the product features including the interest rate, future balance, APR, risks involved & forms the basis of the proposal. All KFI’s are provided by the equity release companies themselves & are produced either by the adviser online, or being sent from the respective company via email.
Should the recommendations be acceptable to the applicants then the paperwork can be completed & the equity release application process commences. The whole process should take no longer than 6-8 weeks. Again check with your equity release adviser as some companies such as Aviva do provide speedier completion timescales than many, if time is of the essence. Again, the expertise & knowledge of equity release advisers can play an important role in how long an application takes & can be influenced by their relationship with the company, solicitors & their own back office systems.
Equity release advisers do charge an advice fee to cover their costs which can vary significantly. The cheapest fee, doesn’t always mean the best option, thus always shop around & obtain a few quotes before deciding which brokerage to deal with.
One way of finding out their competence would be to check their online reviews & consumer comments. Ensure they seem genuine and not manufactured.
Do you know anyone who has previously take a release of equity & found the service they received exceptional? It may be worth asking for this adviser’s details and possibly arranging a free initial consultation to assess their recommendations.
An experienced equity release adviser can save many £1,000’s over the longer term and can be worth their weight in gold. Take your time in deciding, not only on which equity release provider to place your business with, but also the equity release adviser with whom to process this transaction.
One such company would be award winning Equity Release Supermarket, who have a nationwide team of experienced equity release advisers and can be contacted on freephone 0800 028 3142.Back