How equity release works
Your financial adviser will talk you through each step of the process, but knowing what to expect can put your mind at ease. Here we let you know about the product safeguards, what the process is for applying, and the fees that you can expect to pay.
Don't forget, you can always look at our equity release glossary if you come across some terminology you're not familiar with.
- Is a lifetime mortgage right for me?
People choose to release equity from their property for various reasons – from supplementing their own pensions or paying off existing mainstream mortgages, to giving their children or grandchildren a lump sum towards buying homes of their own.
Whatever the reason it’s important to remember that taking out a lifetime mortgage is a long-term commitment, as it is designed to be paid back only when you die or if you move permanently into long-term care. You should consider the options available to you, as there may be more suitable ways of raising the money – such as downsizing, or using your savings.
It’s also important to consider that a lifetime mortgage could impact your tax position and your eligibility for means-tested state benefits. It could also change the amount of inheritance your beneficiaries receive. So, along with discussing your options with a financial adviser, it’s a good idea to talk these outcomes through with your family.
- The safeguards
We are authorised and regulated by the Financial Conduct Authority (FCA). The FCA aim to make financial markets work well so that consumers get a fair deal. Our lifetime mortgage are also only available through financial advisers who are authorised by the FCA and hold the correct qualifications. This means that they are suitably informed and can help you make the right decisions.
Please note, our Over 55 Buy-to-Let Options may not be regulated by the FCA.
There are two different types of mortgages for Buy-to-Let properties:
- ‘Buy-to-Let’ is used to describe most mortgages on properties that are let out. These are not regulated by the FCA.
- ‘Consumer Buy-to-Let’ is used to describe mortgages on properties that have been inherited or were previously the owners’ main residence. These are regulated by the FCA.
Our products and associated literature meets the regulatory requirements for Consumer Buy-to-Let, and Retirement Advantage are registered with the FCA as a Consumer Buy-to-Let lender. The Buy-to-Let mortgages we offer can be used for either scenario. For more information, please speak to your financial adviser.
- The process
If you would like to know more about how to take out one of our mortgages, you can find out about the process here.
- The fees
When you take out a lifetime mortgage, there are some charges that you will need to pay. Below are the main costs – please refer to ‘Our Charges’ leaflet for more detail on the costs involved.
- Valuation Fee
This covers the cost of valuing your property. We don't charge a valuation fee when you set up the mortgage, but you may need to pay one if you want to move the mortgage to another property or take additional borrowing.
- Completion Fee
This is only paid upon completion of your lifetime mortgage, and if for some reason you do not complete the mortgage the fee will not be charged. You can choose to pay this at the point of completion or add it to your loan.
- Your solicitor’s fees
You will need to take legal advice and should agree the fees with the solicitor of your choice. Our legal fees are covered within the Completion Fee, however there may be some additional charges where additional legal costs are incurred.
- Your adviser’s fee
You may be charged an advice fee by your financial adviser, and they will discuss when this is payable with you.
- Early Repayment Charge (ERC)
The loan may be repaid in full, or in part, at any time. However, our plans are designed to last for the rest of your life so an ERC may be payable if the loan is repaid earlier. Your financial adviser will explain when and how you may have to pay this. It is also clearly explained in your Key Facts Illustration (KFI).