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EQUITY RELEASE SCHEMES

Equity Release Scheme.

An Equity Release Scheme allows you to receive equity tied up in your home if you are over the age of 55. You can choose to take the money you release as a lump sum, in smaller portions or even a combination of the two.

There are two different types of Equity Release Schemes, Lifetime Mortgage and Home Reversion.

Lifetime Mortgage.

A Lifetime Mortgage is when you borrow money against a percentage for your property value (typically the maximum being around 60%). This loan however does still include interest on top of the original loan amount. Interest rates added on to the loan have to either be fixed or variable with the variable interest rate having a cap. You have the right to remain in your property until you die or are put into long-term care as long as the home remains your main residence.

It is helpful to note that when your property is sold and agents and solicitors fees have been paid, if the amount left is not enough to pay off the loan neither you nor your estate are liable for the outstanding amount (Equity Release Council standard).

What Can OCC Do?

The OCC platform will check the financial statement of your Equity Release Scheme or Lifetime Mortgage to identify any overcharging as well as your contractual terms for any compliance breaches via a full compliance review.

Home Reversion.

A Home Reversion scheme is when you sell a percentage of your property to a home reversion provider. These home reversion providers however will only offer around 20% to 60% market value of the percentage of your property you are trying to sell. This percentage of market value is typically dependent on the age that you apply e.g the older you are when you apply the higher percentage you will receive. The minimum age at which you can take out a home revision varies between providers but ranges from 60 to 65.

It is helpful to note that when your property is sold and agents and solicitors fees have been paid if the amount left is not enough to pay off the loan neither you nor your estate is liable to pay the outstanding amount (Equity Release Council standard).

Additional Charges & Fees.

There are many Aditional Charges & Fees when it comes to equity release schemes. All schemes will have additional interest rates on top of the original loan as well as arrangement fees that are needed to arrange these types of plans. Additionally, most of these providers will offer a lot less money compared to if you were to sell on the open market.

What Can OCC Do?

The OCC platform will check the financial statement of your Home Revision Scheme searching for overcharging as well as reviewing your contractual terms for any compliance breaches.