While the process of getting equity release is relatively simple, you still need to be careful when deciding upon a particular plan. As equity release is a big initiative and one of the most important decisions of your life, you should carefully research the features and benefits offered by each particular scheme.
One cannot underestimate the importance of independent, impartial advice as choosing the correct UK equity release scheme can save your beneficiaries a small fortune in inheritance terms.
Initially, you need to understand the different options that are available. An independent equity release advisor is the right person with whom you can discuss different available SHIP (Safe Home Income Plans) authorised schemes and options. These professional advisors will also clear all your doubts regarding the process.
Not all equity release consultants can consider themselves as ‘whole of market’ & even the larger apparently reputable age concern companies such as Saga are not wholly independent, but merely work from a panel of lenders. An independent financial adviser should also offer a fee/fee + commission or commission only remuneration basis.
So always ask the question to the equity release adviser – are you completely independent?
When equity release advice is helpful
There are different equity release plans available to suit your needs. The two different cash release plans – home reversion and lifetime mortgage should always be explained. Although lifetime mortgage advice is the most popular, home reversion plans do still have a part to play in the wider scheme of things. This can be particularly evident in a period of static or reducing property values – as we are seeing currently. Thus, a good sign of an experienced independent equity release adviser will be the discussion around the advantages & disadvantages of both schemes.
What other factors should be borne in mind?
While selecting the right plan is quite difficult, financial advisors are quite helpful at such times. The equity release advisor will also inform you about the features and limitations associated with each particular equity release plan.
During conversation, all costs & charges must be covered & this will be after the collation of all facts & figures appertaining to one’s current situation. Following analysis & recommendation, a Key facts Illustration can then be issued which will include all the material facts regarding the equity release mortgage. This will include the interest rate, APR (annual percentage rate), set up costs including valuation fee, application fee, solicitor’s fees & any advice fee charged by the financial consultant.
Due to lack of awareness, many people still tend to go with the wrong plan. This can lead to potential future complaints which can easily be avoided should independent professional advice be sourced in the first place.