Important questions to ask your equity release adviser

Updated 28th November 2023

As a highly regulated product, the advice process for arranging equity release is robust. For example, you must seek advice from a qualified adviser and legal guidance from a solicitor. However, whilst the process for releasing equity is tightly governed, it’s important that any decisions you make are fully informed and based on your own personal needs.

Equity release is not a decision that should be taken lightly, so if you are considering releasing equity from your home, you need to have complete trust in the advice you receive.

The following information is designed to help you understand what you should expect from the advice process and those important questions to ask before going ahead.

What should you expect from your equity release adviser?

One of the most important factors to take into consideration when arranging equity release is that your adviser and lender are members of the Equity Release Council (ERC). This way you can be reassured you are covered by the ERC’s code of code of conduct and your adviser is following a prescribed process, designed to fully protect customers.

The ERC’s checklist for equity release advisers ensures your needs and future objectives as a customer are explored and you understand:

  • Whether the adviser is tied or restricted to certain lenders or works with the whole of the market
  • The process
  • All of the set up and ongoing costs 
  • The alternatives including downsizing and other mortgage options
  • The benefits and risks including the impact to benefits, estate planning and the effect of negative house inflation, future healthcare plans and tax implications

In order to proceed, the adviser should also ensure that you are of sound mind, fully understand the terms and conditions and are not being coerced into making a decision. They will also ask you to talk to your family to make sure they are kept in the loop and comfortable with any decision you make.

What questions should you ask your equity release adviser?

Although the prescribed equity release process should cover off any question marks you may have, here is a list of questions you may want to ask your adviser before choosing to go ahead.

Qualifications, experience and authority

Do you advise on all types of equity release and other types of mortgages and what are your qualifications?

To provide advice, equity release advisers must have a level 4 qualification recognised by the FCA. Some advisers may also seek additional, more specialist qualifications.

It can also be helpful to understand whether your adviser is qualified to talk about other types of mortgage including a retirement interest only mortgage (RIO) so you know they are qualified to review all of the options available to you.

Can you provide testimonials and references?

They may also have been reviewed online by customers via Trustpilot, Feefo etc.

Are you and your proposed lender(s) members of the Equity Release Council?

Consider this a ‘must have’ to ensure you are protected by the ERC’s safeguards.

Are you tied or restricted to one or more provider?

Although it’s not necessarily an issue if your adviser is tied to a specific company or companies, choosing one that works with a number of providers means you can compare lifetime mortgages across a wider range of plans. If your broker offers a range of companies ask whether they have negotiated any special deals.

Process and costs

What are the initial and ongoing costs?

Your adviser should provide you with a full breakdown of set up costs including their fees for advice and arranging the mortgage, the lenders charges, surveyor’s fees, solicitor’s charges and any other costs you may incur.

In addition, you should receive a full illustration of how much the plan could potentially cost over time based on the interest rate available to you and the impact it could have on any inheritance you intend to leave.

What are the early repayment charges?

In case your situation changes, it’s good to understand if you will be penalised for repaying the debt early.

What is the process for releasing equity, who should be involved and how long will it take?

A good question to ask so you understand what to expect from your adviser and the things you need to do, like getting advice from a solicitor and how long will it take.  

What happens when I die?

In addition to understanding the borrowing process, its’ also good to know what happens when you die and how the loan is repaid so you can explain it to your family.

About the plan

How do plans work and what additional facilities are available to me?

These days plans offer flexibility including downsizing protection, repayment options, drawdown facilities and inheritance guarantees. It’s important to fully understand the options available so you can choose the best plan for you.

Benefits and risks

Will the plan have any tax or benefit implications?

Equity release may impact any means tested benefits you receive so it is important to explore this and any potential tax risks with your adviser.

What are the risks to me and my family?

A lifetime mortgage will impact the value of your estate as the loan is repaid from the sale of your property once you die or move into long-term care. Your adviser should explain the possible full extent of these risks and explore ways to reduce the impact, such as an inheritance protection guarantee, only releasing the money you need and making regular repayments against the interest. 

What are my legal obligations?

Although the chances of your home being repossessed with this type of mortgage are low, there will be terms and conditions you need to adhere to, such as maintaining the property.

Will I be able to have anyone living with me once the plan is in place?

An important question to ask if you think your situation could change or a healthcare worker of family member may live with you at some stage in the future.

What happens if the lender ceases trading?

In this situation the plan should be transferred to another lender keeping the same terms and conditions however it’s wise to check.

How am I protected if things go wrong?

In addition to understanding the ERC safeguards, it also helps to know what would happen in the case of unforeseen circumstances like a drastic drop in property values.

The alternatives

What are the alternatives available to me? Are there any alternative options that would provide a better solution?

As part of the process, your adviser should review the alternatives available to you and advise you against releasing equity if they believe there is a better solution.

Are there any other types of mortgage I should be looking at?

A lifetime mortgage may seem like a good option as there are no repayments to make however if monthly affordability is not an issue, another type of mortgage such as a RIO may offer a cheaper solution.

Next steps

Equity release is a big decision, so it’s important to be certain it’s right for you.

To help answer any questions you may have and provide you with more information based on your personal needs, we work in association with leading equity release specialists Age Partnership. Their initial advice is completely free of charge and there is absolutely no obligation to proceed.

You can request a call back or call 0800 133 7656 for an immediate discussion. Alternatively, use the calculator to find out how much cash you could release from your property.

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