Tag Archives: Safe Home Income Plans

Are Equity Release Schemes protected?

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Equity release schemes have come a long way since they were first introduced in the market. Equity release plans proved to be a very popular concept, and it is their popularity that paved the way for new, improved and more flexible options. Equity release mortgages today are also better regulated when compared with older mortgages.

The popularity of equity release is due to a very real need in society. Living costs have gone up considerably, as have property prices. In this light, pensioners who own homes, but not have enough cash flow can find equity release to be a good solution. It allows homeowners to increase their income during retirement, without the need to sell the property and move into a different place.

The Financial Services Authority (FSA) is a body that regulates financial services and products. The FSA aims to maintain transparency and fairness in communication related to financial services, including advice issued to customers. It also aims to eradicate financial wrongdoing. Equity release schemes and mortgages today are completely regulated by the FSA. Equity release customers can seek support and protection from the FSA.

A common concern that people have with equity release mortgages is the potential risk of negative equity. Due to compounding interest built up over a long period of time, an equity release debt can become quite large compared to the amount borrowed. When the house is sold, if the amount owed is higher than the sale value of the house, a negative equity is created.

As the equity release market has matured and become more competitive, it has also become safer for customers. Safe Home Income Plans is a self regulated body that aims to serve customers by making the terms of equity release mortgages more transparent and safe. For instance, all SHIP equity release schemes offer a no negative equity assurance. This means that any negative equity does not need to be repaid to the lender.

Solicitors that can handle all the paperwork related to an equity release application, as well as provide specialist advice. The equity release solicitors’ alliance  ERSA, is a charter of specialist solicitors dealing with equity release mortgages. There is a wide variety of equity release schemes available in the market. It is important to seek professional independent expert advice regarding equity release. Independent experts can provide guidance on the potential risks and advantages of equity release for you.

Which solicitors can process my Equity Release Application?

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The decision to take out an equity release mortgage is not a small one. It has major implications on your life, and as such, the decision should be taken with careful consideration, and with the help of expert advice. Fortunately, as the equity release market has matured over time, it has also become safer for consumers with independent regulatory bodies committed to maintain high safe practice standards.

Safe Home Income Plans is an independent trade body that aims to ensure transparency and consumer safety in the context of equity release plans. SHIP approved equity release providers adhere to certain rules that are designed to maintain transparent communication to consumers, as well as safety measures such as the no negative equity guarantee.

There are certain procedures that need to be followed while applying for an equity release mortgage on your house. Procedures include valuation and completing the application process as per required terms, which can be done by professional solicitors. There are solicitors that specialise in equity release schemes, and can therefore ensure that everything goes smoothly.

The role of a solicitor in the process of getting an equity release is not just to guide you through the paperwork, but more importantly, to guide you through the potential risks and rewards of equity release in your specific context. A solicitor who is an expert in equity release will have up to date knowledge about different options suitable for your particular circumstances. It is therefore vital to find an expert solicitor who knows the equity release market.

Some specialist solicitors firms have formed an independent charter known as the equity release solicitors’ alliance or ERSA. The objective behind this alliance is to uphold the importance of expert and specialist advice within the field of equity release mortgages and also to increase awareness of the public regarding this. If you require guidance about equity release in general or about specific equity release schemes and their suitability, it is necessary to take advice from an expert in the field.

While there may be a lot of information available on various platforms, such as the internet, when it comes to financial products such as an equity release mortgage, it is important to seek information from genuinely impartial sources. An independent financial adviser or solicitor can give fair and unbiased advice about a product, unlike any party affiliated with a particular provider or company.

Lets Start with the Background History to Equity Release

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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