The Equity Release Council is a not for profit organisation established to support fairly managed, affordable equity release offers. The ERC aims to protect the interests of homeowners and improve public trust in equity release related products. Established in 1990, this consumer-focused trade association works closely with the UK financial sector to promote high quality, affordable equity release offerings. At its core, the Council seeks to provide an independent, objective, neutral voice that will serve as the first point of contact for equity release providers. As a result of their continually growing market share, they are now one of the most recognized providers of equity release services in the UK.
Home owners and other home loan borrowers can benefit from the advice and assistance of equity release council members or their associates. These professionals have access to free, impartial advice and are available to give help and guidance on a wide variety of topics relating to equity release and other financial instruments. Home owners and other prospective home owners can also take advantage of the various webinars and information sessions, which are regularly held by the council, and which are designed to provide borrowers with a one-on-one opportunity to interact with professional financial advisors and other members of the equity release council.
As the UK’s housing market continues on the downward spiral, financial experts are recommending their clients to consider refinancing rather than considering a short term home loan solution. According to research by the National Housing Federation (NHF), a declining housing market is placing increasing pressure on people to find ways of reducing their monthly mortgage payments. A high level of borrowing through credit cards and loans means that household budgets are becoming stretched. Householders may be tempted to take out a borrowing program such as a lifetime mortgage or hire out a property to take advantage of equity release schemes. However, if this action is done without consulting with a financial adviser, it could prove to be a costly mistake.
Financial advisers often recommend that their clients take on a mortgage and take out a line of equity release plans with a financial adviser. They often provide the necessary paperwork for the client to fill in and submit to the lender. Once these forms are received by the lender, the adviser helps their client work out an achievable target value for the lump sum they wish to receive. The financial adviser then liaises with the council to work out the terms of the equity release plan. If all goes well, the adviser will go on to secure the new lifelong mortgage from the council and help the client to secure the new target rate of interest.
However, sometimes financial advisers do not act as their clients’ advocate or advisors and do not put their client’s best interests at heart. In such cases, they may recommend one option and neglect to give independent advice on another. Such scenarios pose a considerable risk for those looking to benefit from equity release schemes. As they only have one interest, they tend to favour the lender’s proposal. This is especially the case when consultants receive commissions from loan providers.
When considering whether to use an equity release scheme with a broker, you should also consider the risks of the advisors working on commission fees for the provider. While you should not necessarily trust an advisor entirely, you should make sure that they have the expertise to help you find the best solution for your home reversion issues. Only then should you consider working with financial advisers who have a good reputation with lenders and the relevant regulatory bodies.