Retirement planning is something that we all need to do. It’s not a question of if, but when. Unfortunately, however, retirement doesn’t always go according to plan.
One thing that can happen is having equity in your home and not using it for cash flow or other purposes.
In case you’re wondering:
Equity release is one way to get cash out of the value of your property before you die by releasing some or all the equity from your house into a lump sum payment at close of sale – allowing you to enjoy retirement without worrying about paying off a mortgage right up until the end!
Equity Release Defined
An equity release is a service that allows homeowners to convert the value of their home into cash payments before they die.
The homeowner’s property will usually be sold shortly after applying for an equity release product. It doesn’t stay in their estate like a traditional mortgage would and could result in more money when you sell your house at retirement age.
A lump sum of capital can also help with living expenses or care costs during old age by releasing some or all the equity from your house into a lump sum payment – enabling you to enjoy retirement without worrying about paying off a mortgage right up until the end!
There are two types:
The Lifetime Mortgage is a lump sum payment of your equity, and it’s an interest-free mortgage, so you don’t have to repay any money.
The downside is that the terms are set before applying for this type, so if your house prices increase, you won’t be able to benefit from them – while on the other hand, if they decrease in value, you’ll get less out when selling.
There’s also a limit on how much can be borrowed with these products as well: most lenders will offer up to 75% or 80% depending on age and whether there are guarantees over property etc.
Home Reversion Plan is a lifetime mortgage with an end date. Once the deadline has been reached, you’ll be able to sell your property and repay the loan – so if house prices increase, then you can make quite a good deal after selling up!
That’s not always possible with Lifetime Mortgages, however: there are restrictions on how much equity can be used in these products (though more than 80% is still available), plus usually any profits won’t show for five years or long term care in retirement.
Best of all:
Hence, it’s worth considering whether a Lifetime Mortgage is the best solution for you and your family – especially given there are plenty of other options available these days.
The Equity Release Council In A Nutshell
The Equity Release Council is a trade association and lobbying group for the equity release industry professionals.
They have been set up to represent lenders, providers of equity release products, and other related organizations.
The main aims are transparency in transactions, communicating with the government on policy issues affecting the sector, and providing market statistics and research. These are all essential aspects of an evolving marketplace like this one where buyers must be able to make informed decisions.
In a nutshell, the Equity Release Council is set up to represent lenders, providers of equity release products, and other related organizations operating in an evolving marketplace where buyers need to make informed decisions about their financial future.
Equity Release Council Policies
The Equity Release Council policies cover areas such as:
- Lending practices and products
- Compliance with the law
- Market research
- Training and professional development
- Engagement with relevant stakeholders, including other trade bodies.
The council’s focus is on the interests of providers who have a vested interest in the success of equity release products and those consumers that are embarking on their retirement journey.
The Equity Release Council also has an ongoing commitment to meet its obligations under consumer protection laws by ensuring it collects, uses, and discloses personal information only for specified purposes/per legislation.
This ensures all members can be confident they will not receive unsolicited marketing material from any organization connected to the Equity Release Council without consent being given at one time or another during firm membership.
The Equity Release Council Protect You From
- The types of risks of using equity release to fund unsecured credit debts.
- The problem with interest rates (or the lack thereof).
- The complexity that can be involved in accessing equity release deals and products.
- Lack of competitive pricing due to no competition between providers for the equity release sector.
- Fear of being taken advantage of.
Here’s the deal:
The Equity Release Council has helped people to release equity in their property and save money on energy bills, stay living at home longer, or fund retirement with a cash lump sum during the downturn in recent years. In addition, there are many ways that you can use your property as security against debt if it is not possible for you to make repayments anymore due to illness.
Why would I want to join the Equity Release Council?
You can save money on energy bills or stay living at home longer. In addition, it will help you to release equity in your property and reduce the amount of debt you are carrying, meaning less interest is added to it each year.
If you do not have a pension, this might be an option for funding retirement with a cash lump sum now – without being penalized by tax takeaways.
Interest rates are meager currently. As a result, there have been no mortgage repayments like many people had before 2010 due to buying to let mortgages. If these were still available, they would be good options too (but often more expensive). The problem is when interest rates return to their average level, which could happen next year, we could have more people looking for a solution.
This is an opportunity to release your equity in the property. Still, it should be considered carefully. You need to research different options before taking any action as there are risks involved (again, not all of them are bad).
There is also legal advice from the Equity Release Council about how they can help you find information on this topic, including the main questions that might arise when considering whether or not to get this type of financial product.
It’s essential, though, that customers take their time with these decisions so that they don’t end up regretting their decision later down the line – which would happen if a person does make the wrong decision!
What Does Being Part Of the Equity Release Council Mean?
The Equity Release Council is a group that helps people who are considering getting equity release products. This includes home reversion plans and lifetime mortgages – or Hire Purchase as it’s sometimes known with these types of financial products.
The council provides people with information about what they can do, how it works, and why this might be an option for them if they’re looking at their different options when thinking about retirement planning.
They have two main principles: “Helping you make informed decisions” and “Finding solutions.” They want customers to take time so there’s no chance of regretting any decision later down the line – which would happen if someone makes the wrong one!
On the other hand,
One thing that might not seem straightforward at first is the question of interest rates. A lifetime mortgage often has a fixed rate.
This might be lower than a variable one that would depend on changes in financial markets, for example, so it’s important to think hard about what you need, plan, and try not to make any rash decisions.
The council also talks about equity release products as part of retirement planning because they can offer people an opportunity to access their home or property while still being able to leave something behind when they pass away.
This isn’t just about money either: Equity Release Council wants customers to have peace of mind knowing that if anything should happen, there are consumer safeguards in place with the types of equity.
How To Become A Member Of the Equity Release Council?
This is a fundamental question, and the answer should be given freely. However, I certainly wouldn’t want to miss out on this opportunity because it feels like there’s some catch!
The application process for becoming an Equity Release Council member varies according to which product providers you would prefer:
One option includes getting in touch with your current mortgage provider who can talk through how equity release products could fit into your retirement plans, but it’s worth noting that the council is not a lender and therefore cannot provide mortgages or lend money.
The next option would be to contact an Independent Financial Adviser who can help you determine whether Equity Release could work for your retirement plans, but this will depend on what financial products you already have in place as well as many other factors.
Let me show you:
Suppose you prefer to go down the independent route. In that case, there are some important steps to take before contacting any qualified Adviser firms:
- Find out which type of equity release product they offer (‘equity drawdown’ if they only offer one) by checking their website or speaking with them directly;
- See how much each plan costs upfront and compare it against how much income these types of arrangements can provide.
- See if there are any restrictions on who can be released from an equity release plan (for example, based on age or marital status).
If you want to find out which Independent Financial Advisers offer the type of product that could work for your retirement plans, then contact Equity Release Council.
Benefits For Members
The benefits for members that Equity Release Council offers include:
- Free reviews of equity release plan to find out if they could be right for you;
- Information about the alternatives which can provide income without releasing any equity;
- Information about how to find a reputable Independent Financial Adviser.
Benefits For Financial Advisers
The benefits that Equity Release Council offers to its members include:
- Information about products and services that can help people’s retirement plans;
- Access to a panel of independent financial advisers who offer the type of product or service that could work for your clients.
Cost Of Equity Release Council Membership
The cost for Equity Release Council membership varies depending on the type of service that you need.
A free review to help you find out if an equity release plan might work for your retirement needs is offered at no charge;
And the best part?
There’s no cost to receive Equity Release Council membership. Still, it would be helpful if you joined so that they can provide information about products and services that could help people with their retirement plans.
The team at the equity release council will also benefit by matching qualified members with independent advisers who offer the type of service or product standard that might work best for your clients’ needs.
How Has The Equity Release Council Helped Consumers?
The Equity Release Council has helped thousands of consumers unlock equity in their home with a low rate mortgage. The council provides information on all aspects of these products, so you don’t have to worry about getting into debt. Contact one of our advisors today if this sounds like a solution that could help your situation.
Do I Need Professional Advice Before Joining The Equity Release Council?
It is advisable to seek specialist financial advice on equity from an independent expert when considering taking out an equity release plan through a provider firm on behalf of one or more family members so you can understand your options thoroughly. In particular, if you have other sources of finance such as pensions, savings etc., then it could be cheaper than pursuing this further option.
How Does The Equity Release Council Work?
The Equity Release Council works by taking out a secured loan against the value of your property. The lender will usually take the form of an equity release scheme. You can choose to repay this amount as either one or more lump sums, in monthly instalments over time (known as ‘repayments’) or when someone dies.
What Other Issues Does The Council Tackle?
The Equity Release Council looks at issues such as the steps to take when considering equity release.
Problems that might be discussed include:
- What is your credit rating?
- Are there any family members who could provide a loan or mortgage on your behalf instead of using an equity release scheme?
- Do you have other sources of finance such as pensions, savings etc., then it could be cheaper than pursuing this further option.
- Do I need planning permission for my property before taking out the financial agreement with a lender?
- What if I want to sell my house after agreeing on an equity release plan?
- What are the implications for inheritance tax?
- Is there any way of paying my equity release agreement in instalments rather than one lump sum?
- How long will it take to complete, and does this depend on the lender I choose?
The Equity Release Council is a non-profit organization that provides education, certification, and advocacy for the equity release industry.
They are committed to helping people understand their options in retirement planning and have created an online resource center with educational videos, articles, calculators, and interactive tools to help people make informed decisions about how best to use this financial tool.