DATE PUBLISHED: 11 Mar 2016 LAST UPDATED: 01 Nov 2022

Get the right advice on Equity Release to avoid hefty costs

Equity release mis-selling rockets

Complaints about mis-sold equity release schemes are rising as homeowners aged over 55 borrowed a record £1 billion against their property in nine months, according to the Financial Ombudsman.

What is Equity Release

If you are aged 55 and over, Equity Release is a type of borrowing that allows you to release money from the property you live in without having to make any monthly repayments. There are two main types of equity release: Lifetime Mortgages and Home Reversion plans. Both of these are regulated by the Financial Conduct Authority.

Equity Release products allow you flexibility of using the equity accumulated in your property over the years in the way you choose – with options to receive regular monthly instalments, a one-off lump sum or a combination of both. This means that you will be able to draw a lump sum or regular smaller sums from the value of your home, without the need to sell it.

Get the right advice

It is crucial to get financial advice before entering any Equity Release scheme. An adviser will help you to understand how this mortgage works and to assess how much you will owe to the Bank on your death. The adviser will explain the implications the Equity Release may have on your inheritance tax position, your eligibility for means-tested benefits or your ability to move or sell your property. You should talk to your financial adviser about any risks you may be concerned about and any of your future plans.

The adviser should take into consideration your needs and all aspects of your life, in particular:

  • Take into account means-tested government benefits and/or grants you may be entitled to prior to releasing equity from your home;
  • Recommend the products that you indicated you need, i.e. a lump sum or income, or both;
  • Allow you to have a witness present at the meeting with the adviser;
  • Consider all your other assets, investments and pension arrangements or whether you could raise money elsewhere;
  • Ask about your health;
  • Consider your tax position;
  • Explain the long term effects of consolidating debts into a mortgage or Equity Release;
  • Provide you a Key Facts illustration or a personalised document of suitability;
  • Advise you on product options available from a variety of different lenders to choose from.

Advisers should hold an ER1, CeMAP and CeRER qualifications. You can find more information through the Society of Later Life Advisers or Equity Release Council.

If you choose to get an Equity Release mortgage without advice, your lender or adviser must tell you in writing or in conversation about the legal protection you will lose. This may include the right to complain about how suitable the product was for you.

If the advice was wrong

If you did not receive any advice or feel that the advice you were provided with was wrong or did not reflect your or your parents’ needs or you feel you were taken advantage of because you did not understand how the products work, you may be entitled to bring a claim against your adviser or lender for the poor advice and claim back your losses.

You may be able to pursue your claim with the Financial Ombudsman Service and/or through the Courts.

We can help

Our team of dedicated lawyers can assist you with the assessment of your case and help you to progress your complaint in the most effective way. We may be able to assist on a no win no fee basis. Please contact the Banking and Finance Litigation department on 01202 525333.

How can we help?

When you submit this form an email will be sent to the relevant department who will contact you within 48 hours. If you require urgent advice please call 01202 525333.

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