As a pensioner, you might want to apply for an equity release plan but you might be wondering how safe is equity release . The fact is that there is less concern with safety these days when it comes to equity release schemes. There are two major institutions that you can rely on to ensure your safety and to make sure you are fully protected if you decide to enter into an equity release plan.
There are many different types of equity release schemes but the most common types are the lifetime mortgages and the home reversion schemes. Pensioners who apply for either scheme will be protected by the FSA or the Financial Services Authority. The FSA is responsible for providing rules that clearly defines how pensioners should be treated and for providing complaints and compensation procedures.
The second body is SHIP & stands for Safe Home Income Plan. This is an institution that provides a code of conduct that all providers of equity release schemes must follow. If you are looking for reliable and trustworthy equity release providers, you can contact SHIP for they will only recommend providers that follow their code of conduct.
Equity release providers who follow the SHIP code of conduct will make sure that you will never owe them more than the value of your property. This is called a 'no negative equity guarantee'. They are also required to provide a fair and simple presentation of the different equity release plans that they offer. They need to make sure the pensioners understand the benefits, the limitations and the obligations of their plans. There should be no hidden costs. All equity release providers who follow the SHIP code are required to allow the pensioner to remain in the property until he or she dies or until they move into long term care.
It is always advisable to seek advice from a solicitor or an equity release adviser to make sure that you are fully aware of all of the implications of an equity release scheme. Providers who follow the SHIP code of conduct must allow pensioners to have their legal work done by a solicitor of their choice. This solicitor must be provided with all of the details regarding the plan so that he can decided the benefits that the plan will provide to his client. A certain circle of solicitors have formed their own alliance called ERSA which is the Equity Release Solicitors Alliance. They provide the standards by which equity release applicants should be dealt with & timeframes to work by.
In summary a lot of work has been placed into providing a clearer & fairer system of taking equity release from the property for people over the age of 55 & hopefully answered the question - how safe is equity release?
