Equity Release and the Equity Release Council
An Equity Release Mortgage allows the over 55’s to take out a mortgage on their property in return for a lump sum, a lump sum with a further drawdown facility, an income or a combination of the three.
The mortgage is secured against your property and you can continue to live in your property. Equity release therefore helps the over 55’ withdraw equity from their property assets to ensure that they enjoy a comfortable retirement.
The over 55’s are now increasingly turning to Equity Release Mortgages as an alternative to selling their homes at the bottom of the property market slump, to generate income or capital as well as a variety of other reasons such as debt consolidation and assisting children.
Equity Release the Benefits
- You retain ownership of your home with the legal right to remain there for the duration of your lifetime.
- Products available offering no monthly repayments.
- Reduce IHT liability.
- Fixed interest rates on a lump sum and drawdown facility.
- A borrower must receive independent legal advice from a solicitor and independent financial advice from an IFA throughout the transaction.
- Well respected ‘household names’ Equity Release Lenders, such as Liverpool Victoria and Aviva to name a couple.
- Potential to downsize if you wish and take your Equity Release Mortgage with you to the new smaller property.
- The availability of a No Negative Equity Guarantee – i.e. you will never owe more than your home is worth ensuring the mortgage debt is not passed on to your family or estate.
- SHIP (Safe Home Income Plans) products are also regulated by the Financial Services Authority.
This is not a product of last resort but one of a number of mainstream options for the over 55s to consider and the borrower is protected throughout. The equity release market has grown from £28.9 million to approximately £1 billion in the last 20 years.
The Equity Release Council
May 2012 saw the launch of the Equity Release Council (ERC) which is now the industry body for the equity release sector. The ERC will be building on the solid regulatory foundations first put in place by SHIP over the last 20 years.
The ERC is an all encompassing industry body representing surveyors, legal professionals, intermediaries, qualified financial advisors and lenders in the equity release sector. The ERC unites the sector and offers support to borrowers at every stage of their equity release journey to help a rapidly aging population in retirement.
The ERC’s fundamental goal is to ensure that equity release products are both accessible and safe for borrowers. The ERC’s Code of Conduct, which members sign up to, will ensure advanced safeguards and guarantees for borrowers, reinforcing the already strong levels of market confidence in the advice given on equity release products and in the actual equity release products themselves.
With the ERC there is a bright future for equity release, improving both public awareness and confidence in the growing equity release market to ensure equity release is a mainstream product for retirement planning.