Preparing for an Equity Release
Preparing for an Equity Release
There are many reasons for taking out an Equity Release Plan, but before you take that final step here are a few things you should do first.
Take an honest look at your finances
You probably have a specific reason why you are considering taking out an Equity Release Plan, how much you are thinking of taking, and what it is you want to spend the money on. Any good advisor will talk you through your current financial situation before starting any application, so it makes sense to take a cold look at your finances before you talk to the professionals.
Looking at your finances will include noting your income and expenses down, as well as detailing your savings and any money you owe. Taking into account how these things may change in the future will also be important to you. If you are not yet retired, then finding out what pension income you may get and when you will get it will not only help you to establish how much you want but also whether or not you should take it all at once or in stages.
Take some time to find out if you are taking all the benefits that you are entitled to, including items such as Pension Credit, and “any means tested” benefits. Taking a lump sum from an Equity Release Plan may well affect your entitlement to these benefits and you should weigh up the pros and cons of proceeding with an application carefully.
Be specific about what you are trying to achieve
Although you may have a specific idea in mind such as clearing some existing borrowing, or making some improvements to your home, it is a good idea to take a step back and make sure you know exactly what you are wanting to achieve. If you are clearing existing borrowing, have you taken into account everything? Have you checked to see if there are any penalties that will be charged for clearing them early?
Likewise, if you are taking on some major improvement projects to your home, have you costed them as accurately as you can? Most people know the experience of starting a project and watching it go over budget.
While there may be a particular reason for thinking of taking out an Equity Release Plan, it presents an opportunity to look at other aspects of your life as well. It is a common experience for people to take a certain amount from an Equity Release Plan only to wish they had taken a larger amount for different purposes just a short time later. Of course, if you opt for a plan where you can take additional amounts in stages then this will not be an issue for you.
Talk about your plans with your family
Obviously, you do not have to talk about your plans with your family if you do not wish to do so. But, it is generally regarded as a good idea to do so, as taking out an Equity Release Plan will ultimately affect them with regard to whatever inheritance may be left, and any additional paperwork they may have to deal with after your death.
Having a conversation about your financial situation and plans may or may not be something that comes easily within families and it is always up to you how much or how little you wish to talk about. It is always possible that having such conversations will result in different ideas and perspectives which may take you in an entirely different direction and one that may suit you better at that time.
Every good advisor will encourage you to talk with your family about your plans and are more than happy for family members to attend any meetings you have with them. Data Protection laws means that an advisor cannot discuss anything about your situation to anyone, including your family, without your clear instruction. If you decide to give that permission, then the adviser will be more than happy to answer all the questions they may have about your plans.
Only look for independent advice
Currently there are nine providers of Equity Release, and it is your interest to find out which one will offer the best product for you and your circumstances.
The only sure way to do this is to make sure you ask for “Whole of Market” advice from an experienced and qualified advisor.
“Whole of Market” advice means that the advisor is able to deal with every company, and will have access to some additional products only available through the independent channel.
Advisors that are not “Whole of Market” will either use a limited panel of companies, or be representing just a single company. In both instances they can only advise you as to what is the best product from the ones they are representing. Obviously, this restricts your choice.
Finding a qualified and experienced Equity Release advisor is fairly straightforward. Checking the Equity Release Council website for advisors who are registered with them is a good place to start.
Means to a Lend only deals with Independent Advice. You can use our free referral service by completing our enquiry form in your own words, and we will put you in touch with an expert that can help you. It's quick, simple, and completely without any obligation.
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