Which? investigation reveals equity release advice issues
16 January 2012
An investigation by Which? has uncovered a number of problems relating to the advice given to people considering equity release mortgages to free up cash from the value of their homes.
According to the publication, key failings were discovered as a result of the research, including the fact four advisers failed tests altogether, while only four visits were deemed almost perfect.
In the worst example of equity release advice found by Which?, a 75-year-old man was told to unlock more money than he needed to and use the surplus as an investment.
Return on investment
It was noted this is not the right thing to do, due to the fact the return on his investment was unlikely to cover the cost of the extra borrowing he had been recommended.
"Equity release is a complex and life-changing issue, so it’s vital that a good adviser explains it properly. They should explain both schemes - home reversions and lifetime mortgages - as well as discussing the interest rates and how the debt grows, downsides and limitations of equity release and how this can change future options," pointed out the publication.
Advisers should also discuss other options than equity release schemes with those who want to learn more about financial choices, but ten of the specialists visited by Which? failed to do this.
It was pointed out house prices also need to be on the agenda when an individual interested in equity release schemes asks for advice, due to the fact fluctuations in the value of their home are likely to have an impact on their final decision.
According to a report by the Daily Telegraph, it is vital people considering equity release mortgages take legal advice in order to gather as much information as possible.
Changes to regulations are predicted to have a major impact on the sector and it may therefore be about to become harder to be approved for a financial product of this nature.
If you are a homeowner aged 55-95 and looking to release cash from your home, speak to award-winning equity release specialists Key Retirement Solutions today on 0800 531 6027. Key offer all their customers independent advice on all equity release plans that are SHIP (Safe Home Income Plans) approved. Lines are open Monday – Friday 9am – 5.30pm.
Alternatively, use Key's free equity release calculator today to find out how much money you could release from your home.
Posted by Tom Papworth