Tag Archives: Equity Release Supermarket

If I Release Equity, who is responsible for the maintenance of the house?

Equity release schemes can offer an important option to people who are looking to increase their cash flow and at the same time retain their home. If you are considering a home equity release, it is important to understand exactly what it entails and seek professional advice regarding the different policies available.

General information about equity release plans is widely available on the internet. There are many equity release FAQs available online, and this can give you a basic idea of what equity release means, as well as the associated benefits and risks. However, it is necessary to take advice from an independent financial expert about the specifics.

An independent financial adviser who has specialist knowledge about equity release plans and home equity release will have up to date information about different products and providers, as well as about which product is suitable for your particular situation. Another important factor is that an independent advisor has no affiliations to equity release providers and can therefore give far more impartial advice.

An equity release mortgage is a loan taken against the value of the house. Both home reversion loans, as well as lifetime mortgage equity release loans, need to be repaid to the lender once the house is sold. However, the house can only be sold after the owner has died or moved out and into permanent care. In case of joint applicants, this is done after the second applicant has died or moved into care.

When it comes to ownership, there is one key difference between lifetime mortgages and home reversion equity release plans. Home reversion involves selling part of the house and lifetime mortgage involves taking a loan against the house. As such, in home reversion the ownership of the house is transferred to the lender, and in lifetime mortgage, full ownership remains with the borrower. In both cases, the applicant is fully responsible for the maintenance and upkeep of the house.

There are many equity release providers and increased competition in the market has resulted in more competition and better rates for customers. Also, improved and more flexible home equity release products are now available compared to mortgages available until a few years back. You can compare different equity release products on websites such as equity release supermarket.

How Much Does it Cost To Set Up an Equity Release Mortgage?

As with any type of mortgage application, there are fixed costs attributed with the setting up of the scheme. These are mandatory expenditures which are necessary in ensuring the equity release deals are legally watertight.

Firstly, before any legal work starts we need a professional assessment of the property to ensure it is adequate lending & to ascertain the properties true market value, assuming a reasonably quick sale. There is a cost to employing the services of a surveyor to prepare a valuation report on behalf of the equity release company. The fees borne on valuation depend on the properties market value & can range on a £250,000 property from a FREE valuation upto over £400. This valuation fee is paid on application, usually by cheque & payable to the lender concerned.

Secondly, the lender themselves will charge their own application fee & is usually deducted from the loan on completion. However, some lenders such as Just Retirement will actually allow you to add this to the loan. Please bear in mind, if this is the case you will pay compounded interest on this small charge too, for the rest of your life. To mitigate this, some applicants will deduct this from the equity release mortgage application. Again application fees can vary & range from no fee at all, upto £695 with LV=.

Thirdly, you will need the services of a solicitor to carry out the legal work & checks on your behalf. This must be a separate lawyer to that of the equity release provider as laid down by the SHIP rules. Some solicitors have formed ERSA (Equity Release Solicitors Alliance) & they themselves have set standards for equity release solicitors to meet. Practices such as Goldsmith Williams & Equilaw adopt these virtues.

Currently, companies such as Equity Release Supermarket have a fixed fee of £395+VAT & disbursements with a no completion, no fee, arrangement with both legal firms.

The solicitor is also responsible for checking title, obtaining signed documentation from the application & the liaising with the lenders solicitor to a satisfactory completion. The final job of the solicitor is to sign a SHIP certificate to confirm they have met the standards required & the client is fully aware of the contract they are entering into.

Finally, your independent equity release adviser will usually charge an advice fee upon completion. Some brokerages will try and charge you upfront for their service. Don’t. As with any service provided or goods bought, you should only pay upon successful completion.

Costs for equity release advisers can vary. The better brokers will assess the situation as they will receive commission from the lender they have placed your business with. Therefore, sometimes in lieu of commissions received this can be offset & sometimes even waived should commissions be sufficient in their own right. Nevertheless, fees can rise from £395 upto unfavourable rates of £1500 which should be avoided as the same service can be offered by companies such as Equity Release Supermarket who are more experienced & on a fixed cost basis of £695 for their recognised quality of client service.

Am I Eligible for an Equity Release Plan?

There are various qualifying criteria required to meet eligibility for an equity release application.

The main aspect is age. This can vary between lenders, however the lowest acceptable age is 55 with a lifetime mortgage plan, albeit some lenders will only start from age 60. Furthermore, the alternative to a lifetime mortgage which is the home reversion plan, will only accept a minimum age of 65 to qualify.

The property itself is then next to be analysed. The home must be the applicants main residence, in the UK & be worth a minimum of £60,000. It should usually be of standard construction, however alternative structures, depending on type can be acceptable. Check with an independent equity release adviser first.

To find your equity release adviser companies such as Equity Release Supermarket have nationwide advisers that can facilitate your equity release application. This can be completed by either arranging an appointment in the comfort of your own home, or over the telephone, which suits you best. Their interactive UK map enables you to make the necessary equity release enquiry to prompt a call from your local adviser.

Alternatively, call Equity Release Supermarket on 0800 678 5159 who can advise where your local independent financial adviser is located.

Lets Start with the Background History to Equity Release

Equity release schemes have increased in demand with the elderly generation not just in the UK, but all over the world. These schemes have come a long way since their introduction back in the mid 1960’s. However, this hasn’t been without its problems & adverse press coverage.

The stigma of the elderly generation having been fleeced by the Shared Appreciation Schemes (SAM’s) back in the 1990’s still lingers. However, important steps have been taken to clean the image of equity release schemes. This has been led by FSA (Financial Services Authority) regulation of both lifetime mortgages & more latterly home reversion schemes have come under its wing. The current front runner in hailing the equity release cause is SHIP (Safe Home Income Plans).

Launched in 1991, SHIP has laid down a code of conduct that all equity release providers must follow to be a member of their trade body. SHIP is the representative of the equity release market in terms of promotion & statistics covering members which include the main providers of lifetime mortgages and home reversion plans.

Now confidence has been restored, equity release schemes have become a mainstay of providing financial freedom in allowing people over the age of 55 to utilise their main asset. These equity release schemes enable citizens to spend their retirement days in peace by way of providing a tax free capital lump sum or an income for life.

How do these schemes usually work?

Different schemes offer different amounts but the basic principles remain the same. The three options are a one-off cash lump sum, drawdown facility from which you can take ad-hoc payments when required or an income for life. The most popular route these days for financial & flexibility reasons are the drawdown equity release schemes. These schemes give the amount to you in regular instalments as per your convenience.

The most crucial of all conditions that a prospective client should fulfil is that they must have little or no outstanding mortgage. Based on a combination of age & property value will determine how much can be raised. If a mortgage is in force, then as a minimum, this calculation must cover the outstanding mortgage amount. However, for many a further lump sum maybe required for additional expenses such as home improvements, new car, holidays or gifting to the children.

It is always wise to be on the lookout as only then will you get the best deal available in the market. Analyse and evaluate your overall financial position before you jump into any equity release scheme, making sure to choose the one that gives you the most advantages. Consult an equity release specialist who can assess the whole of the equity release market & provide independent advice. Such companies that are major brokerages in UK equity release schemes are: –

• Equity Release Supermarket

• Compare Equity Release.com

• EquityRelease2go.com

For contact details on all these equity release advisory services call our dedicated freephone number on 0800 678 5159