Equity release is a way for those aged 55 and over to take out a loan against the value of their home. The most common type of equity release is a loan called a Lifetime Mortgage. The loan and the rolled up interest is paid back from the sale of the property after the borrower/s have moved into long-term care or passed away.
While it can be a useful way to boost your finances and standard of living in later life, we understand that equity release naturally comes with considerations. That’s why B Mortgage Services is a member of the Equity Release Council.
What is the Equity Release Council?
The Equity Release Council is the representative trade body for the equity release sector.[1] Members who join must ensure they meet and uphold the Council’s standards. These standards go above and beyond statutory regulation.
Choosing an Equity Release Council member means you’ll benefit from their five key product standards:
- Interest rate transparency
For Lifetime Mortgages, the interest rates must either be fixed for each release or if variable, must be capped for the length of the loan.
- The right to remain in the property
As a borrower, you have the right to stay in your home until you die or move into long-term care. If you’re a couple, this right extends to the surviving partner who can remain in the property until they die or move into long-term care.
- The right to move
Equity release borrowers must have the right to move to a new property, provided it meets the equity release lender’s criteria.
- The right to make penalty-free repayments
Borrowers have the right to make penalty-free repayments, subject to the loan criteria. This could help to keep interest low or reduce the loan amount to be repaid.
- There must be a no negative equity guarantee
This point helps provide increased protection for you and your beneficiaries. When the property is sold to repay the loan, estate agent and solicitor fees are paid first to ensure there are no fees to pay at the end. The loan repayment comes out of the sale proceeds after all fees are paid. If, once fees are paid, there isn’t enough money left to pay back the full loan amount, the amount is capped at the value of the property. This ensures that borrowers and their beneficiaries won’t be stung by a negative equity situation.
What’s required of you
There are a couple of points that you will need to observe when taking out a Lifetime Mortgage.
The property you are releasing equity from must remain your main residence and you must adhere to the terms of the lifetime mortgage agreement.
Always look to find a qualified and regulated equity release adviser or other professional for advice. If you take out a lifetime mortgage through us, we’ll make sure your equity release product meets the core product standards set by the Equity Release Council.
That’s because, as mentioned, B Mortgage Service is a member of the Equity Release Council. We agree to uphold the five product standard points listed above for all our equity release customers. We recognise their importance and how they help to bring confidence to our customers in the way we operate.
