In the labyrinth of financial decisions, equity release stands out as a pathway for homeowners in their later years to unlock the value of their homes without having to move. But like every major financial commitment, the choices you make can impact your future.
Ensure Memberships of Regulatory Watchdogs: FCA and Equity Release Council
At the heart of a reliable equity release company are its affiliations. The Financial Conduct Authority (FCA) and the Equity Release Council (ERC) play pivotal roles in safeguarding the interests of consumers.
Trusted Providers & Lenders to Avoid
An Equity Release Lender is a provider that’s authorised by the financial services regulator to offer regulated lifetime mortgages and/or home reversion plans. As mentioned above the Council sets Product Standards for its members’ products, but providers can offer non-compliant products with clear customer communication.
However as a rule we would recommend avoiding an equity release lender that is not part of the Equity Release Council.
The full list can be found on the ERC’s list of providers however here are some of the Equity Release Council Member providers are:
- Canada Life
- Just Retirement
- One Family
- Liverpool Victoria (LV=)
- Scottish Widows
- Legal & General
By using these providers you will be protected by the Equity Release Council’s Product Rules which are:
- Interest Rates: For lifetime mortgages, the interest rate should either remain fixed for each release or, if variable, it must be capped for the entire loan duration.
- Residential Rights: You should retain the right to reside in your property for life or until you need to transition into long-term care. This privilege is contingent upon your property remaining your primary residence and your adherence to the terms and conditions of your contract.
- Property Transferability: You retain the option to relocate to another property, subject to the new property meeting the approval of your product provider as adequate collateral for your equity release loan.
- No Negative Equity Guarantee: A crucial aspect is the inclusion of a “no negative equity guarantee.” This safeguard ensures that when your property is sold, after settling agents’ and solicitors’ fees, even if the proceeds are insufficient to repay the outstanding loan to your provider, neither you nor your estate will be responsible for any further payments.
- Penalty-Free Payments: All customers who opt for new plans adhering to Equity Release Council standards should possess the freedom to make penalty-free payments, contingent on meeting the lending criteria.