The self-regulating Equity Release Council trade body was formed on May 28, 2012. It was formerly known as SHIP abbreviated for Safe Home Income Plans. The body includes all the participants who are the stakeholders in some or the other form associated with equity release plans. It is an important step towards forming a self-regulatory body including qualified financial advisors, intermediaries, plan providers, lawyers and surveyors to safeguard the interests of the consumers at large.

Equity release plans have always strived to be open and fair for the consumer’s right from the beginning. These plans have always offered the best options for people older than 55 years of age so that they could live their post retirement left as they desire. It helps them to release the equity held in their homes that could be otherwise lying idle. Safeguarding the interest of the consumers has always been a priority and with the formation of Equity Release Council, it has been declared loud and clear that customers' interests are the top priority.

The aim of the Equity Release Council trade body is to spread awareness amongst the people who are looking for an alternative in borrowing money without going through the liabilities in the last stage of their life. It is advisable to take advice only from the approved members of Equity Release Council as they have signed a high standard Code of Conduct that helps in safeguarding the interest of the consumers.

All the equity release plans supported by the Council states that the plans will have a mandatory product literature that will have all the terms and conditions explicitly stated in written form. It includes the cost, tax situation, clause related to moving houses and any other offering that is promised. They also guarantee a no negative equity thereby giving an assurance of no extra liability apart from what is available in the value of the property.

 

FCA Regulation

While the Equity Release Council is an independent regulator that accepts membership, there is a government facility that also helps regulate financial products like lifetime mortgages and home reversion schemes.

The FCA, which was known as the FSA before it became the Financial Conduct Authority, is in charge of ensuring that all financial products are up to the standards of the government. These standards have become tighter since the subprime mortgage crisis and the resounding two recessions the UK went through in the past decade and this one.

By looking for the FCA regulation and ensuring a broker maintains these standards it is possible to find a scheme that fits your needs.

 

Basics about Equity Release

While it is good to know there are two regulatory bodies that brokers adhere to, it can be equally important to do your own reading about the various schemes. In this way you can speak with advisers and brokers with knowledge to ensure you have found the best product for you.

Home reversion is one equity release. It is set up for home owners to sell a part of their home, as much of the home as is comfortable for the owner. If it is a joint ownership then both parties need to be 65 years of age. This is a requirement of the sale of the home as well as ensuring the lifetime tenancy agreement covers both owners. The owners remain in the home until both have died or moved to a new location. The rest of the home is then sold to the home reversion broker in exchange for the final equity. This equity is an inheritance for those left behind or for the owners to live on in their new life.

Lifetime mortgages are loans in which the home does not have to be sold until death or as a means of paying back the mortgage. The mortgage is not repaid on a monthly basis. Instead, the principle balance remains unpaid until the home is sold at death or a person leaves the home for a new adventure. Interest is charged through APR which also adds to the loan balance. It is only the interest only option that requires an interest payment each month leaving the principle home equity loan amount the same.

The Equity Release Council trade body also ensures that no consumer should be pressurised to take the services of any specific solicitor for legal work but the consumers are free to select any solicitor entirely based on their personal choice and preference. Each and every consumer taking an equity release plan enjoys full rights to remain in their home throughout their life.