Questions you need to ask and points to consider

Taking an equity release plan of any kind is a big decision. Before you decide, there are some questions that you should ask yourself, your adviser and the product provider. Here are some points to consider:

·          Why am I thinking about equity release?

·          What am I trying to achieve?

·          Are there other options? Consider all the alternatives to equity release, e.g. have a “benefits check” to see if there are any state benefits you may be entitled to but not claiming; investigate trading down, using savings, or selling other assets.

·          What is my attitude towards inheritance for my heirs? Should I talk things over first with my family?

·          Will extra income/capital affect my tax position and/or state benefit entitlements that I am claiming – if so, how?

·          Is there a minimum or maximum age requirement?

·          Is there a minimum property value?

·          Do I need to own the freehold of my property?

·          Will I receive a lump sum or regular payments?

·          Are the regular payments fixed or will they increase with inflation?

·          Can I live in the property for as long as I wish?

·          Will I be able to move to another property - including sheltered accommodation - without financial penalty?

·          Can I use my own solicitor?

·          What happens if my circumstances change? If I get married will my new partner be able to stay in the property if I die first?

·          Are there any extra costs - i.e. for the survey, legal fees, or an arrangement fee? Can these be refunded if I decide to go ahead?

·          Can the interest rate change? If so, is there a cap on that?

·          Is there a risk that I could end up owing more than the value of the house?

·          How will I be affected by any changes in my health?

·          How much equity should I release?

·          What will be the impact on my tax position?

Once you are happy with the answers to these questions and have decided on equity release, then take the following steps to ensure peace of mind:

·          Take advice from a properly qualified adviser, who has considered other alternatives and who can explain the impact that an equity release scheme might have on any means-tested state benefits. Your Annuity Bureau Consultant is such an adviser.

·          Make sure both mortgage schemes and reversion schemes have been fully investigated and that you fully understand what the future repayments will be.

·          Make sure you get an illustration of what the repayments will be if you live 10 years beyond your average life expectancy and consider what impact this would have on any inheritance you intend to leave.

·          Make sure that you fully understand the legal contract before making a final commitment.

·          Be aware of what happens if you miss repayments, or if you want to move, trade down or you have to go into care. Or if you remarry, or perhaps have a family member move in at some time in the future?