The ‘equity’ you have in your property is its valuation less any mortgage or other debt held against it. So what is ‘equity release’? In the UK it is a generic term given to products that allow older homeowners to take cash out of the value of their home without having to sell it or move out.
In the UK, equity release plans are designed for those over the ages of 55, and the amount you can release depends broadly on two things: the age of the youngest applicant and the value of your home.
The equity release market suffered in the late 1980’s from a lack of regulation and client protection, but both of these matters have since been comprehensively addressed. Clients are now offered a high degree of reassurance, including most product providers being members of the Equity Release Council, the industry body for the equity release sector. The organisation adheres to the principles of the Safe Home Income Plans (SHIP) Standards Board, which was born out of the predecessor organisation also know as SHIP. This sets the standards and principles required of members of the Equity Release Council. Their Statement of Principles also specifies certain guarantees all applicants must receive:
- Members agree to provide fair, simple and complete presentations of their plans
- The client will always be able to use the Solicitor of their choice to make the legal arrangements
- A SHIP certificate will be completed clearly showing the main costs to the client’s assets and estate, including how the loan amount may increase, or (for Home Reversions) how much of the property is being sold
- All SHIP plans carry a ‘no negative equity’ guarantee. This means the applicant will never owe more than the property is worth, no matter what happens to house prices or the size of the debt
- The client will have the right to occupy their property for the rest of their life if they are able and choose to do so
Andy Wilson Financial Services is proud to have been appointed as a member of the Equity Release Council in April 2013.
The Financial Conduct Authority (FCA) took over the regulation of all forms of Equity Release in 2012. This organisation replaced the Financial Services Authority (FSA) who regulated both types of equity release from 6 April 2007. This regulation requires Advisers to hold a professional qualification in equity release advice together with strictly defined requirements for the advice process.
Equity release schemes can be complex and you should always seek professional advice before making any commitment. Andy Wilson has significant experience in the provision of understandable and clear advice and the arrangement of all types of equity release plans.