In essence, Equity Release is the act of releasing the unused capital (or equity) in your property.

The released equity can be used as a cash lump sum, to provide an income, or a combination of both.

There are two principle methods used – Lifetime Mortgages and Home Reversion plans. The Lifetime Mortgage is generally available for those clients aged 55 and over whilst applicants generally need to be aged 60 and over to qualify for a Home Reversion scheme.

Both of these scheme types have been available for a considerable time however the Lifetime Mortgage version has more recently included the ability to make monthly interest payments, or even make capital repayments. These are valuable additions and mean that the borrower can be in control of the way they wish to allow their loans to build, over time.

This drawdown facility is also a very popular method of enhancing a pension income. Indeed, after April 2006, the Government refers to income drawdown schemes as an unsecured pension.

Regulation in this area means that the industry body the Equity Release Council (formerly SHIP), in conjunction with the Financial Services Authority (FSA), provides valuable protection for those considering Equity Release.

The Financial Services Authority (FSA) is the independent body that regulates the financial services industry in the United Kingdom and they have regulated Lifetime Mortgages since 2004 and Home Reversions from 2007. www.fsa.gov.uk

Equity Release Council (formerly SHIP) is a trade body launched in 1991 and is dedicated to protect equity release planholders and promotes the area of safe home income and equity plans, via its Code of Conduct. The code of conduct binds all participating product providers to observe the fair, simple, easy to understand and complete presentation of any product they may offer, in addition to the famous “no negative equity” guarantee.

Useful Links

An Equity Release Council plan guarantees that you cannot lose your home – whatever happens to the stock market or interest rates http://www.equityreleasecouncil.com/home/

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