Equity Release Companies to Avoid

This guide will help steer you through the maze of selecting the right equity release company.

In the labyrinth of financial decisions, equity release stands out as a pathway for homeowners in their later years to unlock the value of their homes without having to move. But like every major financial commitment, the choices you make can impact your future.

Ensure Memberships of Regulatory Watchdogs: FCA and Equity Release Council

At the heart of a reliable equity release company are its affiliations. The Financial Conduct Authority (FCA) and the Equity Release Council (ERC) play pivotal roles in safeguarding the interests of consumers.

The Financial Conduct Authority (FCA)

The FCA is a regulatory body overseeing financial markets to ensure they operate transparently and fairly. Companies regulated by the FCA adhere to strict standards of operation, ensuring consumer protection.

Any equity release company that is not regulated by the FCA should be approached with caution. The FCA’s presence guarantees that companies maintain high professional and ethical standards.

The FCA’s role, as defined by them, is to ensure that “Financial markets must be honest, fair and effective so consumers get a fair deal. We work to ensure that these markets work well for individuals, for businesses and for the economy as a whole. We do this by:

  • regulating the conduct of nearly 50,000 businesses
  • prudentially supervising 46,000 firms
  • setting specific standards for around 17,000 firms“

You can check if an equity release company is regulated by the FCA by checking the financial services register.

Equity Release Council

This is a trade body representing the equity release sector specifically. Being a part of the Equity Release Council means that a company adheres to a strict Code of Conduct that prioritises the welfare of the client.

This code is an assurance of transparency, fairness, and honesty and the ERC sets the standards that all equity release companies should stand by. Therefore we would recommend ensuring that you avoid an equity release company that doesn’t comply with this code of conduct set out by the Equity Release Council.

Some advisory companies and solicitors may still recommend Equity Release Council approved products without being members themselves. However, this is still ok and is the most important aspect, as you will still get all of the safeguards the Equity Release Council provides through the product.

You can check if an equity release company is a member of the Equity Release Council by checking the list of registered advisors. You can see our membership details here on the Equity Release Council’s Website.

Request our Equity Release brochure

Request our Equity Release brochure

REQUEST BROCHURE
How much equity could I access?

How much equity could I access?

CALCULATE NOW

Trusted Providers & Lenders to Avoid

 

An Equity Release Lender is a provider that’s authorised by the financial services regulator to offer regulated lifetime mortgages and/or home reversion plans. As mentioned above the Council sets Product Standards for its members’ products, but providers can offer non-compliant products with clear customer communication.

However as a rule we would recommend avoiding an equity release lender that is not part of the Equity Release Council.

The full list can be found on the ERC’s list of providers however here are some of the Equity Release Council Member providers are:

  • More2Life
  • Canada Life
  • Just Retirement
  • One Family
  • Liverpool Victoria (LV=)
  • Scottish Widows
  • Legal & General
  • Aviva

By using these providers you will be protected by the Equity Release Council’s Product Rules which are:

  • Interest Rates: For lifetime mortgages, the interest rate should either remain fixed for each release or, if variable, it must be capped for the entire loan duration.
  • Residential Rights: You should retain the right to reside in your property for life or until you need to transition into long-term care. This privilege is contingent upon your property remaining your primary residence and your adherence to the terms and conditions of your contract.
  • Property Transferability: You retain the option to relocate to another property, subject to the new property meeting the approval of your product provider as adequate collateral for your equity release loan.
  • No Negative Equity Guarantee: A crucial aspect is the inclusion of a “no negative equity guarantee.” This safeguard ensures that when your property is sold, after settling agents’ and solicitors’ fees, even if the proceeds are insufficient to repay the outstanding loan to your provider, neither you nor your estate will be responsible for any further payments.
  • Penalty-Free Payments: All customers who opt for new plans adhering to Equity Release Council standards should possess the freedom to make penalty-free payments, contingent on meeting the lending criteria.

Who do we work with?

There are a few key providers in the Equity Release market that also work within the Equity Release Council’s guidelines. As trusted providers, we’re happy to work with all of them:

Red Flags To Look For When Choosing an Advisor

Once you have verified that your chosen equity release advisor is FCA-regulated and a member of the Equity Release Council you’ll be a in position to move forward.

A trustworthy advisor is the cornerstone of a good equity release experience. However, there are tell-tale signs of advisors you might want to avoid:

  • Pushiness: An advisor should always provide you with ample time to consider your options, not rush you into decisions. Some advisors will be paid commission and therefore been keen for you to make a decision as soon as possible – keep an eye out for this.
  • Reluctance to Discuss Alternatives: A genuine advisor will present all possible solutions, even those outside of equity release, ensuring you make an informed choice – again, as part of the Equity Release Council’s code of conduct the advisor must prioritise the client’s best interests.
  • Promptness to Transaction: If an advisor is too quick to move onto paperwork without comprehensive discussions, it’s a red flag. We recommend having at least two meetings to ensure that you have a chance to ask any questions, as often in the first meeting you may not think of any but after awhile more will come to mind. and again, The Equity Release Council’s best practice guidelines expect the advice process to be conducted over separate appointments.
  • Upfront Payments: Be wary of those demanding money upfront without a clear breakdown of the services they will provide.

 

Red flags when Appointing An Equity Release Solicitor

Why do I need a Solicitor for Equity Release?

When taking out equity release, a solicitor plays a crucial role in ensuring that the process is legally sound and that your interests are protected.

Here’s what a solicitor typically does during the equity release process:

Request Our Equity Release Brochure

Request Our Equity Release Brochure

REQUEST BROCHURE
How much equity could I access?

How much equity could I access?

CALCULATE NOW
  • Independent Legal Advice: Your solicitor will provide you with independent legal advice. This is a legal requirement to ensure that you fully understand the implications and risks associated with equity release. They will explain the terms of the equity release agreement, including the impact on your property, inheritance, and potential future financial arrangements.
  • Property Check: Your solicitor will conduct a thorough check of the property’s legal title to ensure there are no outstanding issues or restrictions that could affect the equity release transaction.
  • Verification of Identity: Your solicitor will verify your identity and ensure that you are the legal owner of the property.
  • Liaison with the Equity Release Provider: Your solicitor will communicate with the equity release provider to review and negotiate the terms of the equity release agreement. They will ensure that the terms are fair and in compliance with relevant regulations.
  • Signing Legal Documents: Your solicitor will assist you in signing the legal documents related to the equity release agreement. This includes the lifetime mortgage or home reversion plan contract.

  • Protection of Your Interests: Your solicitor is responsible for safeguarding your interests throughout the process. They will make sure you fully understand the potential impact on your estate, inheritance, and any implications for benefits or taxation.
  • Completion of the Transaction: Once all legal requirements are met, your solicitor will oversee the completion of the equity release transaction. This involves ensuring that the funds are transferred as agreed and that the equity release provider has met all their obligations.
  • Registration with Land Registry: If applicable, your solicitor will register the equity release with the Land Registry to update the legal status of the property.
  • Ongoing Legal Support: Your solicitor can continue to provide legal support and advice throughout the lifetime of your equity release arrangement. They can assist with any questions or concerns that may arise.

Appointing a solicitor is entirely your choice and you may have one that you’ve used for years and have a good relationship however it’s important to choose a solicitor experienced in equity release transactions to ensure a smooth and legally sound process.

Additionally, your solicitor should be a member of the Equity Release Councill, which ensures they are familiar with the specific requirements and standards for equity release transactions.

You can find an Equity Release Solicitor on the Equity Release Council’s Website.

Solicitors to Avoid

Much like choosing an advisor, selecting the right solicitor is crucial. Avoid solicitors who:

  • Don’t specialise in equity release.
  • Are not willing to meet face-to-face.
  • Are not members of the Equity Release Council.
  • Rush the legal process without ensuring you understand every step.

Understanding Equity Release Types – Which one should I avoid?

There are primarily two types of equity release products:

  • Lifetime Mortgages: This is a loan secured against your home. You retain ownership of your home and receive a lump sum, a regular income, or both. The loan amount and any accrued interest are paid back when you die or move into long-term care.
  • Home Reversion: In this scheme, you sell a part or all of your home to a reversion provider in exchange for a lump sum or regular payments. You have the right to live in the property until you die, rent-free, but you also have the responsibility of maintaining the home. When the property is sold, the proceeds are divided based on the ownership proportions.

There are of course benefits and disadvantages to both types however the most common type is the lifetime mortgage due to more flexibility with potentially low interest rates.

If you’d like more information then see our guide to the types of equity release.

 

Equity release can be a significant boon, providing much-needed financial flexibility. However, the journey is paved with numerous choices. By aligning yourself with companies recognised by regulatory bodies like the FCA and Equity Release Council, you ensure a safer and more transparent process.

Trust companies like ourselves who have partnered with esteemed providers and understand the importance of client-centred service. Remember, the foundation of any financial decision lies in understanding, transparency, and trust.

Request Our Equity Release Brochure

Request Our Equity Release Brochure

REQUEST BROCHURE
How much equity could I access?

How much equity could I access?

CALCULATE NOW

What else would you like to know?

What can Equity Release be used for?

USES FOR EQUITY RELEASE

What should my family know?

FAMILY MEMBERS

What costs are involved with Equity Release?

COSTS

How can I get the best interest rate?

RATES

Whatever your plans and ambitions, we can help.

If you have ideas about how you could put the equity tied up in your home to good use, give us a call today and speak to a helpful, professional adviser.

Freephone
0808 1691979

Or drop us a line