Is Equity Release Safe ? is a common question that I get.

6 Safeguards and Guarantees

I don't recommend that you consider Equity Release until you have looked at all other possible options to raise funds.

However if you are prepared to look at Equity Release, then be assured that there are many Safeguards and Guarantees in place to protect you.

The protection starts very early on

Equity Release is a product regulated by the Financial Conduct Authority, an independent non-governmental regulator of the UK financial services industry.

The fact that is regulated means of course that it must follow strict regulations. 

To be able to advise clients on Equity Release, advisers need to be specialists and have to pass stringent examinations to obtain qualification by The London Institute of Banking and Finance. This qualification is The Certificate in Regulated Equity Release, known as CeRER.

There is a similar Certificate in Equity Release issued by The Chartered Insurance Institute.The qualification is over and above the qualification needed to advise on mortgages.

So ENSURE that any adviser who speaks to you about Equity Release holds CeRER or CII certification, inspect their business card and look for the CeRER or CII after their name. You can then be assured that you are speaking with someone who knows their business and is qualified to advise you.

Is Equity Release Safe ?

The Equity Release Council are the industry body for the Equity Release sector in the UK., representing the providers, qualified advisers, solicitors and intermediaries. The ERC sets standards to be upheld by all members.

4 Equity Release Council Safeguards and Guarantees

These include:-

• Requiring the homeowner to consult a solicitor of their choice to ensure the rights and obligations of both parties have been fully explained.Both the Homeowner and solicitor would need to sign a certificate confirming that the consultation had taken place before the mortgage can be completed.

• Ensuring that the provider gives a 'No Negative Equity' guarantee i.e. that the amount that has to be repaid will not be more than the price obtained when the property is sold.

• That the borrower is entitled to remain in their home for rest of their life and in the case of joint borrowers, this applies to both of them.

• The right of the borrower to transfer the loan to another property, provided that the new property is acceptable to the lender.

So, ENSURE that your proposed lender is a member of the Equity Release Council in order that these safeguards are in place.

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Pat Cunningham  CeMAP,  CeRER