Equity release is a big financial commitment, and not something you want to enter into lightly.

In fact, the financial regulator the Financial Conduct Authority (FCA) requires homeowners to seek professional advice from an advisor with a specialist equity release qualification before they can unlock any of their property wealth. Here are a few resources that can help you get started.

How does equity release work?

There are two main types of equity release scheme, lifetime mortgages, which are the most popular, and home reversion plans. Both enable you to access value from your home without having to leave it.

With a lifetime mortgage, you essentially take out a loan secured against your home but you do not normally need to make any repayments until you die or move into long-term care.

Home reversion schemes work in a different way, as you sell all or part of your house but continue to live in it rent- free until you die or move into long-term care.

Equity release products can be complex, so it’s vital to understand all the ins and outs first. An advisor can help you decide whether it is right for you and which type of plan might be best for you based on your own personal circumstances. Find out more in our article Equity release – what is it and how does it work?

How safe is equity release?

One of the biggest misconceptions surrounding equity release is that it’s unregulated, and therefore unsafe. In fact, there are significant consumer protections in place, and the equity release market is covered by the Financial Services Compensation Scheme (FSCS), which offers consumers protection if something goes wrong with the financial services and products they’ve taken out. Find out more in our guide Is equity release safe?

However, it’s important to remember that there are downsides that must be considered before deciding whether it’s the right option for you, which is why advice is so important.

An advisor’s role is to check you’re eligible for equity release, and to assess whether or not it’s suitable for you, based on your individual circumstances.

They must explain all the pros and cons of equity release, so that you’re fully aware of all the costs involved, what the tax implications are, and what will happen if you want to move house after releasing equity from your home.

How do I find a trustworthy equity release advisor?

You can find a local financial advisor on VouchedFor*, the review website for financial advisors, or Unbiased*, which connects users to advisors in their area, or for more information, check out our guides on How to find the right financial advisor for you.
They can help you understand the best option for you and recommend a suitable product from a member of the Equity Release Council (ERC).

This is the trade body for the equity release sector. The Council holds its members, which include equity release providers, advisors and solicitors, to high standards of professionalism to ensure that equity release products are as reliable for customers as possible, and that customers are fully informed of all the potential benefits, risks and downsides before they take out a plan.

One of the benefits of finding an advisor through the ERC is that it lays out specific rules and guidance for each of the services it offers. For advisors, some of the rules are:

  • Advisors need to be familiar with Financial Conduct Authority (FCA) rules and adhere to them at all times.
  • Advisors need to be familiar with Financial Conduct Authority (FCA) rules and adhere to them at all times.
  • Advisors need to make sure that the customer is aware of all of the risks, features and benefits of a particular product.
  • Advisors need to consider the customer’s physical and mental health when suggesting a suitable plan, and seek an opinion from a medical expert if necessary.
  • In the case of a joint application, advisors need to speak to both parties and make sure they both have a voice in the process, and that both understand all relevant information.

Chris Pond, Chair of the Standards Board at the Equity Release Council, said: “Allowing people to access some of the savings built up in the value of their homes could help fill the increasing gap in retirement incomes and long-term care costs, but people must have confidence that they will be treated fairly if they consider this option, which is why the maintenance of the highest standards of consumer protection is so essential.”

You can choose your own solicitor to carry out the legal work required to set your plan up if you want to. Your advisor will provide them with full details of the plan, including the rights and obligations of both you and your equity release provider under the contract, if you decide to proceed. Both you and your solicitor will be required to sign a certificate confirming that these rights and obligations have been explained to you and that you wish to enter into the plan.

If you have found a potential advisor, you should check to see if they are a member of the Equity Release Council, so that you can be confident they will stick to the council’s standards. If you are struggling to find one to begin with, their website allows you to search their member base by location and the kind of meeting you prefer. Make sure you check the costs involved, which the advisor should provide you with up-front. Some will charge a flat fee, whilst others may charge a percentage of the loan amount, typically 1.5-2%. Others may not charge for advice at all.

If you’re looking for somewhere to start, you can get fee-free expert advice from a Rest Less Mortgages equity release specialist, with no broker fees on application. They are active members of the ERC and can advise on equity release mortgages from the whole of the market. They’ll listen to your needs and talk you through your options, so you can decide if equity release is the right option for you.

If you need a more general introduction to equity release or just want to learn more about it, our equity release section contains articles on all aspects of equity release, including eligibility guides, the risks of equity release and possible alternatives that you might want to consider.

Have you released equity from your home and did you find it easy to get equity release advice? We’d be interested in hearing from you. You can join the money conversation on the Rest Less community or leave a comment below.

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