Vital Equity Release Questions to ask

Crucial questions to ask yourself and your equity release advisor

If you are thinking about whether an equity release plan for yourself or to help a loved one, friend or client, then you may wonder which are the key questions to ask. 

You may ask a broker or lender questions, and there are also a series of crucial questions that you will need to ask yourself or discuss with your partner to ensure you are ready for the process. 

Doing so can speed up your application and help achieve a pleasing outcome should you release equity. 

An equity release specialist will also ask detailed questions about your property, finances and family as part of the advice process, which is a regulated activity. 

Questions you should ask yourself if you are thinking about equity release

Many questions can be written down or checked before you start the process. Here are questions you may like to discuss with friends or family. If you are married, you will need to discuss this in detail with the married person, as they would be part of the process in most cases. 

What is the value of your home?

You will have to ask yourself if you know the value of your home. Is your estimated valuation the current market rate? If no similar properties have been sold near you recently, then it may make sense to have your home valued by a local estate agent. If you are unsure of the value, doing so will give you an idea.  

An independent surveyor will value your property as part of the process, which is the value the lender will use for your plan. 

Why do you need the money, and how much do you need?  

In most cases, the money released from your home can be used for anything you wish; with anti-money laundering rules, you must be releasing cash for a good reason and require the extra funds; otherwise, a good advisor may advise against releasing equity from your home, or recommend you wait.

Is there anything unusual about your property? 

These are things like flat roofing or if the property is not of standard construction. It does not necessarily mean you cannot release equity, but all lenders have different criteria, so the choice of products available to you may be narrower. Your adviser will discuss these items with you and advise accordingly before making an application. 

Does your property have solar panels or spray foam insulation? 

Solar panels or spray foam insulation could affect your application, and some lenders could decline it. It is crucial to ensure you have information about anything like this, like installation dates, companies and, if any are available, certificates. 

Do you wholly own the property, and does anyone other than the mortgage holders live there?

You must own the property to be eligible for an equity release plan, and there would be no issues with selling the property should you enter long-term care or pass away. 

If you have an adult child living with you, most lenders would need them to sign a waiver before making an offer. 

How is your health? Do you or your partner have any medical conditions? 

The applicant’s health will be assessed, as a medically-enhanced plan may suit those in poor health.

Vulnerability will also be assessed through a series of questions to ensure you can decide to release equity, understand the process through to completion, and ensure advice adheres to regulatory guidelines. 

Have you spoken to your beneficiaries, such as your family?

As an equity release plan or lifetime mortgage affects your inheritance, you must include your descendants in your decision to release equity from your home. 

Questions you should ask your equity release adviser

Equity release advice is a regulated activity and an advised process, meaning you will need to speak to a specialist about your plan. The FCA will regulate all advisers directly or through an intermediary, such as a specialist mortgage network, much like a standard mortgage adviser. 

A specialist equity release adviser will have studied to obtain equity release qualifications and can answer any questions you have on the phone or via email. They will also process a wide range of cases, see all different situations and obtain knowledge of each of the lender’s criteria, which is essential for a successful application. 

Are you part of the Equity Release Council (ERC)?

You should ask your adviser if they are part of the Equity Release Council, as all council members have to offer plans which abide by their standards charter. 

What is the maximum amount I can release? 

This is a simple calculation based upon the age of the youngest homeowner and the value of your home. If you have health conditions, you will likely be able to release even more, but the percentages vary by lender and, indeed, by the plan. 

At Beyond, we have a simple calculator to give you a rough idea. Still, our advisers will be able to scan the current products to see the maximum loan you could potentially get and the interest rate you could achieve. 

It is worth bearing in mind that the full release will likely have a higher interest rate than a lower value loan as it is less risk to the lender. However, this again will vary by plan and lender based on many factors. 

Do you advise on home reversions and lifetime mortgages, and can you explain to me the differences? 

You must understand the differences between these products, what your adviser will recommend, and why. 

At Beyond, we explain clearly that we only provide advice on lifetime mortgages. 

Am I or my property eligible for a lifetime mortgage?

An adviser will be able to give you an idea should your property or circumstances will not be eligible for equity release. They will conduct a detailed fact-find which comprises careful questioning about the homeowners’ personal information, financial information and details about the property itself. 

What alternatives to equity release do I have? 

There are many alternatives to Equity Release via lifetime mortgage, and this could fill an entire article by itself. Should you or your property not be eligible for a lifetime mortgage, other options may be available. 

Many take the opportunity of approaching retirement to downsize, thus negating the need to release equity or move and use a lifetime mortgage to purchase a property should their current property not be eligible. 

Some clients with a shortfall of funds look into a retirement interest-only mortgage. Many retirement mortgages and specialist brokers can give you an idea of what is possible. 

Do you search the whole of the market? 

Some companies are tied to specific lenders and will not place cases elsewhere. The fact that a broker is tied may not be mentioned, or they may pass you onto their sister company which may offer whole market advice. If you go to one bank, you may not know if this is the best deal and can end up with a higher rate. If you are rolling up interest, this could cost a significant amount come the time it needs to be repaid.

The whole market advisers have a range of lenders on their panel. They can compare plans and ensure you have the right strategy to fit your circumstances at the right price. 

What are the Fees and Costs involved? And have I factored in all costs?

Some advisers will charge a percentage-based advice fee based on the release amount, with a minimum price for small release amounts, which can be significant. 

It is worth understanding if the fees incurred will be rolled up with the loan amount or will be separate and paid upon completion. 

At Beyond, we charge one simple fixed advice fee when a mortgage completes, which can be paid separately to ensure this amount is not rolled up into the interest of the loan. 

As well as the adviser fees, there will also be solicitor fees. It is best to use solicitors who specialise in equity release as the

Can I move in future? 

Thinking about your future plans and options is worthwhile, especially if you are considering moving at a future date. An adviser will be able to explain early repayment charges and how porting a lifetime mortgage works, and what this would mean in practice. 

What are the early repayment charges?

Early repayment charges are vital to understand if you want to repay the loan early. Most lifetime mortgages have repayment charges, a percentage that reduces over time until around 13 or so years until it disappears. Still, it does vary by plan, which has different features. 

If you have a high rate and wish to switch to a new plan at a lower rate, you may have an early repayment charge on your existing lifetime mortgage. It may still be worthwhile to do in the long run, and our advisers will be able to project this for you to see if it is beneficial to do so you pay less interest. 

What is the equity release process?

The equity release process can last around 6-8 weeks for most cases once the application is made. 

However, this depends on many factors and the complexity, your property, and other mitigating factors. 

An equity release adviser can guide you and explain the process; a brief overview is below. 

• Initial Consultation – You can discuss your needs with our team and give basic details about what is needed. If possible, the adviser will provide an idea of what is achievable in the current market. A fact-find can be booked when happy with this. 
• Fact Find – Your advisor will ask you a series of questions to search for the right product for you. 
• Presentation – Your adviser will present their recommended product 
• Application – Once agreed, an application is placed at the lender.
• Valuation – The lender will send an independent surveyor to value the property. 
• Offer – This is where the lender will make the offer and send you all of the information. 
• Solicitors Appointment – 
• Completion – Once this happens, the funds should be transferred to your bank account. 

Questions you will be asked as part of the process 

An equity release adviser will conduct a thorough ‘fact-find’ with a number of questions and can last between 30 minutes to 1 hour. As well as some general questions about your goals, needs and feelings, the call or face-to-face meeting would cover the following areas for all applicants:

• Personal Questions – These include basic details like date of birth and more in-depth discussions about your health. 
• Property Details – Address, construction, existing Mortgage Details
• Family Details – Dependents, Family Involvement etc

Financial Details

• Liabilities are financial questions about any debt you may have, such as credit cards and loans. 
• Assets – Property wealth, Savings, Pensions you have etc
• Pensions – more detailed discussions about pensions
• Income, Expenditure, Credit History

Other

• Alternative Options
• Future Plans
• Vulnerability 
• Reasons 

Conclusion

We hope this gives a useful high-level overview to help you understand the equity release process and give you an idea of helpful questions for all parties involved. 

Got other questions? Speak to an advisor today for a no-obligation chat.