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Advantages
An Equity Release plan gives you get security & peace of mind. You and, if applicable, your partner can remain in your own home for the rest of your life. An ER plan could also help you with Inheritance Tax planning. You can also use an ER plan to pre-fund your long term care.

Age
Most plans are available from age 55. Exceptions may also be made for younger people because of factors such as redundancy, disability or inheritance.

Benefits (State, Means-tested)
You should always consider that an Equity Release plan can affect any means-tested benefits that you are entitled to but usually your improved financial situation will outweigh any lost benefits.

Buildings Insurance
When you take out an Equity Release plan, you are required to have adequate buildings insurance to the value of your property, as stated in the survey.

Capped Interest Rate
This is a variable rate mortgage with a capped limit beyond which the rate paid will not exceed. Advantages: Borrowers can benefit when rates fall but have the reassurance that their payments will not rise above the capped rate. Disadvantages: Like fixed or discount rate mortgages you may have to pay an application fee when setting up the mortgage. Capped rates may be a little higher than fixed rates over the same period.

Carers
Most plan providers allow you to have a live-in carer, as long as your carer signs a disclaimer to vacate your property if you die, and have no claim on the property.

Comparative Tables
Everyone has different circumstances so why not use our Equity Release comparative tables to see if you can quickly find a list of suitable Equity Release plan providers that match your requirements.

Declaration of Trust
When you take out a Home Reversion plan and retain a portion of the property, a Declaration of Trust will be written in favour of yourself and, ultimately, your estate. This is a legally binding document, which confirms your retained ownership rights expressed as a percentage of the future sale value.

Deeds
Legal papers that establish who owns your property and names anyone who has an interest in its value. On completion, the Equity Release plan provider will retain the deeds for safekeeping.

Disclaimer
A document to be signed by an occupant of an Equity Release property, other than the plan member(s), e.g. a live-in carer, or family members. This document confirms that the signatory has no right to remain in the property after the plan member's death.

Early Leaving
If you have sold the whole of the equity in your property and have to surrender the lifetime lease early, for any reason, then reversion plan providers will normally make an Early Leaving payment to you. The size of payment is normally dependent on your age and the length of time that you have been in the plan. As mortgage plans are currently structured to be for life or the need to go into care, some plan providers make early repayment charges to plan members who surrender their leases early.

Equity
Equity in property terms, is simply the value of your home minus any existing mortgage. So, if your home is currently valued at £140,000 and you have an existing mortgage of £40,000, then the equity in your home is £140,000 - £40,000 = £100,000.

Essential Repairs
If the valuer identifies essential repairs, these will normally have to be completed before the Equity Release plan provider releases any monies.

Estate
The value of all your assets, including your home, any savings and all other possessions minus any debt e.g. a Lifetime Mortgage.

Ex-Council Houses
Plan providers will normally accept ex-council houses, epecially on estates where the majority of the council houses have been sold. Generally, plan providers want to see that you have owned your ex-council property for at least three years before the Equity Release transaction.

Family
You should always consult all your immediate or close family members so that they are aware of the full implications of an Equity Release plan right at the start.

Financial Services Authority (FSA)
The FSA is an independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000. From 31-October 2004, the FSA regulates the mortgage market. This includes Equity Release Lifetime Mortgages. In approximately April 2007, the FSA has also regulated Home Reversion plans.

Fixed Interest Rate
These offer borrowers a guarantee of what their mortgage payments will be for a set period of time. In the UK most fixed mortgage rates are fixed for a period of 1 - 10 years. After the fixed period the rate will generally revert to the lenders standard variable rate. Advantages: Convenient for budgeting as you know how much your payments will be. Also, you will be insulated from any significant upward swing in mortgage rates. Disadvantages: You run the risk that mortgage rates generally will fall below the level at which you fixed. Also, fixed rate deals often involve the borrower agreeing to a penalty charge - often up to six months interest - if they decide to redeem or repay the mortgage early. Other options include mortgages that are: variable rate, capped or discounted.

Ground Rent
As homeowner, you continue to be responsible for payment of Ground Rent.

Guarantees from SHIP members
SHIP members guarantee absolute security of tenure. Futhermore, you have the right to remain in your home for the rest of your life. SHIP members also guarantee full portability. This means that you can move property without financial penalty.

Health
Plan providers will normally offer you enhanced terms if you are in poor health, leading to reduced life expectancy. If you are in very poor health, an equity release plan may not be advisable, unless it is used to enable you to be cared for in your own home.

Home Income Plans (HIP)
This is a term used to describe a type of Equity Release product which provides an income via an annuity. See Mortgage Annuity.

Home Reversion
This is a method of releasing equity involving you selling part or all of your property (expressed as a %) for an income or cash sum. Ownership is 'reverted' to the plan provider with any remaining equity that is not to be released being written in favour of your estate through a Declaration of Trust. The Declaration of Trust specifies that your estate will receive the original % retained of the future net sale proceeds from the disposal of your property.

Homeowner Support
Plan providers can offer you different levels of support to after completion of an Equity Release plan. This may include personal visits to your home and/or telephone support, dealing with such matters as repairs advice, insurance claims, financial assistance with repairs and any issues surrounding moving house or into care.

Inheritance Tax Planning
Inheritance Tax is now a major problem for an increasing number of people as house prices continue to rise. Under the current tax regime, the first £300,000 of your estate is zero rated for Inheritance Tax but any remainder is taxed at 40%. Using Equity Release to mitigate Inheritance Tax can be an effective estate-planning tool. No providers currently offer "back to back" arrangements, but ALL plans remove part or all of the value of the property from the estate. The benefit released can be channelled into an investment vehicle written under trust for beneficiaries. Alternatively, the equity released can be used immediately, which is an advantage of using Equity Release for Inheritance Tax planning over some other methods. A solicitor and/or IFA who specialises in Equity Release will be able to advise you on how to avoid Inheritance Tax.

Insurance
Most plan providers require you to insure the property or pay the buildings insurance premiums, for the value agreed at the outset of the Equity Release plan.

Interest Only Roll Up Mortgages
If you are elderly, then special Equity Release mortgages are available. These are interest-only roll up mortgages with "no negative equity' guarantees, if offered by SHIP members. The amount of capital released is determined by your age, with older people able to release most of the equity in their properties.

Joint Life
If you and a partner live in your property then Equity Release arrangements are usually on a 'joint life' basis. Your joint ages are used to calculate the benefit and are based on the younger age. This guarantees security of tenure for both of you.

Joint Ownership
A jointly owned property with only one of you in residence can qualify for an Equity Release plan. Using a Reversion plan, a set % can be used for the Equity Release with the remaining % written as a Declaration of Trust to your partner. Consent must be given by the other partner as the equity share cannot be realised until the eventual sale of your property.

Knowledge
Knowledge is power, so why not use our portal and other sources to learn about Equity Release and the variety of schemes that may be available to you.

Legal Advice
SHIP plan providers insist that if you are seriously thinking about taking out an Equity Release, you take independent legal advice. The solicitor who handles the conveyancing is required to sign a Solicitor's Certificate which confirms that he has fully explained the implications of the Equity Release plan to yourself.

Lifetime Lease
SHIP providers of Home Reversion plans guarantee a secure lifetime lease with a 'peppercorn' rent. The lease guarantees your right to remain in your home for the rest of your life.

Lifetime Mortgage
This is a generic term that the Financial Services Authority (FSA) have chosen to use to describe equity release mortgages aimed at older consumers who are looking to supplement their income or pay for long-term care. They are a way of releasing some or all of the value of your home, without having to move. The amount borrowed is normally repaid upon the death of the borrower.

Live-in Carer
Equity Release plan providers will generally allow a live-in carer in your property. A disclaimer must be signed stating that your carer will vacate the property on your death. An Equity Release scheme used to fund care in your home is a real alternative if you do not wish to go into residential care.

Long Term Care
You could consider an Equity Release scheme, as an excellent way to pre-fund your long term care by either a single premium plan if capital has been released, or a monthly plan, if income has been provided by the Equity Release scheme.

Maintenance (Home)
Equity Release plans generally stipulate that the property continues to be maintained by yourself. This requires you to maintain the property in the same condition as when the plan commenced.

No Negative Equity Guarantee
Interest-only roll up mortgage plans provided by SHIP members guarantee that neither you or your estates can be put into negative equity. The plans guarantee that the interest rolling up against the retained equity in your property will cease to accrue once it reaches the value of your remaining equity. Please note that some non-SHIP members also offer these guarantees.

No Repayments
SHIP members' mortgage plans do not require any payments during the lifetime of the plan member unless you move house. Interest payments continue under the mortgage plans until your property is sold or the loan and interest is repaid. The mortgage is redeemed on death or earlier vacation of your property out of the proceeds of sale by your estate or plan provider.

Occupancy
The property may only be occupied by the plan member(s) or with a live-in carer who has signed a Disclaimer. Some providers allow you to continue with an existing lodger arrangement, subject to signing a Disclaimer and providing the occupancy is subject to a six month assured shorthold tenancy agreement.

Open Market Value
This is the valuation used for all Equity Release plans. Some providers allow you to choose any Royal Institute of Chartered Surveyors (RICS) approved surveyor, others restrict the choice to a panel.

Portability
Many plan providers, including all SHIP members, guarantee that you can move house without financial penalty. Some administrative costs are usually charged to you when this occurs. The property that you are intending to move to, must meet the initial suitability requirements. Mortgage plans, if you are moving downmarket, may require a proportion of the loan plus interest to be repaid and replaced with a new loan on similar terms. This may involve you in some expense.

Property Types
Plan Providers use different criteria for evaluting property. If your property would not be acceptable for a regular mortgage then it would not generally be suitable for an Equity Release scheme. Freehold houses of traditional construction and which meet the plan provider's minimum value criteria are usually acceptable. Some providers may also accept: Long leasehold flats with a minimum outstanding lease (usually 80 years). Ex-council properties, especially where the majority of the houses in an estate have been purchased. Sheltered housing.

Questions
You will almost certainly have some questions. Everybody has different circumstances. Try looking in our FAQ section, you might find the answer there.

Quotations
Plan providers will be happy to give you a written quotation.

Rent
SHIP members offering Reversion plans operate a lifetime lease on a 'peppercorn' rent basis. Some plan providers will charge you a nominal £1 per month

Residential Care
Once you move permanently into residential care then your property is sold. If you are in a Reversion plan, then any retention is paid to you. For mortgage plans, the loan & interest is repaid with any balance going to yourself. Some plan providers may make an Early Leaving payment to you, reflecting the property being available for sale earlier than expected.

Retention or Retained Interest
This term used to describe your % interest in a property where a Reversion plan has been taken out, and you have not utilised all the equity. For example, you sell 25% of your home and retain a 75% retained interest in the property. After a few years, you decide to sell another 25% of the equity, taking advantage of any rises in value in the interim period. Following this, you still retain a 50% interest in the equity of your home.

Safe Home Income Plans (SHIP)
SHIP was setup in 1991, and is a trade association with a voluntary code designed to set standards for consumer protection for the Equity Release industry. All SHIP members are pledged to observe the SHIP code of practice. The SHIP code of practice: commits to fair, simple and complete presentation of the plan, including costs. requires the planholder's legal work to be carried out by a solicitor of their choice. requires that every plan carries a 'no negative equity' guarantee. The 'SHIP safety check' also guarantees that the plan member has the right to live in their home for life and to move to a suitable alternative property without financial penalty. The plan member's own independent solicitor must sign the Solicitor's Certificate which verifies that he has fully explained the implications of the plan to the member.

Sheltered Housing
Some providers will accept properties that are part of sheltered housing complexes.

Solicitor's Certificate
All SHIP providers insist that your own, independent solicitor signs this certificate to acknowledge that the key features and implications of the selected plan have been brought to your attention. No SHIP-protected plan can proceed without this signed certificate.

Time scale
Most Equity Release plans take on average 6-8 weeks to complete once you have accepted the offer. The time from your initial enquiry to completion can be more than 6 months. This reflects the fact that Equity Release can be the biggest decision facing you, the homeowner, in your retirement.

Top Up Option
If you have taken out a Reversion plan but have kept a retained interest, you can, at a later date, revert or sell an additional % of your property and receive additional payments or increased income. If you take out a Top Up Reversion, then you will benefit from higher rates based on age, as well as any increase in the value of your home. If you have taken out a Mortgage plan you can also apply for further cash releases when you reach a set age. The amount released to you, will depend on the provider's lending criteria and interest rates at that time.

Undertaking
Any problems identified in the survey of your property i.e. rising damp or dated wiring, needs to be rectified by you if the plan is to proceed. Most plan providers will complete the plan subject to an Undertaking that you will rectify any such problems within an agreed time scale once the plan has been completed.

Upkeep
All SHIP plan members are responsible for the upkeep of their property. Your property must be kept in the same condition as at the plan's commencement.

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