What to expect from the advice process

1. Pre-appointment

Identity: Like all financial advice today, an adviser and lender needs to identify the person(s) they are dealing with. We have to make sure that you are the owners of the property and have the authority to make the equity release application. If you rent the property from a landlord, then you do not have the legal authority to take an equity release.

There are two parts to the identity process. Firstly a photograph from either a passport or a driving licence. The document must be in date so please check that it has not expired.
Secondly, we need to be sure that you live at the address on the application. For example, if you are a landlord and rent other properties, where do you live? To establish where you live, we will need either, a council tax bill, paper bank statement, credit card, or mortgage statement sent to you in the post. Internet printed copies are not acceptable. Tax statements, state pension letters, utility bills such as gas, electric and water. Even letters from banks, loan companies say for a car, are all good forms of proof of residence. Ideally they must be under 3 months old to show that you were recently here.

Income: Please have to hand your respective incomes broken down by State pension, Employers pension, Personal pension, Investment income, Rental income.

Expenditure: All essential bills such as gas, water, electric, council tax, phone, internet, mobiles. Life insurance and insurance on house and car. Mortgage, credit card and loan payments. Any regular payments to family members, charities, savings and investments. If leasehold property, service charges, ground rents.

State benefits: Do you receive means tested state benefits such as Pension credit or Council tax reduction? If yes, the benefits agency will have sent you a letter listing your entitlement. We will need the amounts you receive as releasing equity can affect your future entitlement to these benefits. Ask your benefits agency for a new letter if you cannot find it. As part of my professional service, I conduct a state benefit check. If you are not claiming entitlements, I will identify those which may be payable. For example, many end up not paying council tax if they can claim pension credit.

Insurance: All lenders will require you to have adequate buildings insurance. A copy of the current insurance schedule will confirm the level of cover and if this needs to be adjusted prior to an application. It is worth noting that for two applicants, both must be listed as policyholders.

2. Our first meeting

Whilst we will have had an initial discussion by phone or email, this first face to face meeting is very important.Due to Covid-19, face to face meetings must be socially distanced, with both parties wearing appropriate PPE where possible. Some meetings can be conducted remotely using zoom or teams, and signatures will need to be witnessed independently. I always encourage family involvement where possible and if they can attend all the better. Family involvement is not compulsory as some do want to manage their own finances and this has to be respected. The meeting is to establish where you are now and what you want to do. We look at the information you gathered under the pre-appointment above. This will establish your current financial position and your proposed need for equity release. My role is to look at the viability of what you wish to do and ensure that equity release is the best option both now and into the future. Remember that equity release is a long term financial solution and this is why they are designated as Lifetime Mortgages.

On occasions, the solution can be found within the family. Moving or downsizing to be closer to those who matter can be good. Yes, there are the costs of moving but if that means you are closer and the family can support you better, what price do you place on that? Can your family find the funds to support you. Often this is care in your home or adapting the property so it makes day to day living easier. Are you expecting an inheritance? It might be worth waiting six months or a year if funds are about to be released from a relatives estate. Do you have savings and investments? No good borrowing capital if you have savings in the bank paying little or no interest.

Health: It is a vital part of our meeting to establish your current health. A sudden deterioration can alter your plans and for example mean that you cannot take those long haul flights. An adviser has a duty to check that a client has the mental capacity to understand what is being proposed. Conditions such as Parkinson's or MS may mean that you need to move to avoid stairs and now have to live in a bungalow or ground floor flat. There are lenders who offer higher releases for those in need of care in their home, or slight reductions in the interest rate to reflect a shorter life span.

We establish all this information on what is called a factfind. If you have a financial adviser or have applied for a mortgage before, you will be familiar with the process. A picture will emerge and usually offers several options. No firm decisions are made at the first meeting unless there is a general consensus on the way forward.

3. Analysis and research

After looking at all your circumstances and if equity release is a good solution, research is conducted. I offer "whole of market" research and advice. This is the highest level of service and differentiates from those who offer restricted products, which is often "free advice". This is where the product choice is restricted to one lender or a small panel of lenders. Advice is normally given over the phone, so if there are two of you and a family member wants to be involved, this method has questionable benefits. Be aware that there are currently nine lenders with many product options, so this “free” restricted advice could be expensive in the long term. It usually comes to light when you discover that your money has run out and you have to repay the current lifetime mortgage. Repaying a lifetime mortgage early can be very expensive and can be up to 25% of what you borrowed. With full market research and a proper discussion, you will end up with the correct product for your needs.

Please note that not all properties are acceptable to all lenders. Each lender has a set of criteria for certain constructions like timber frames or concrete walls. Some place limits on the size of flat roofs or the size of the gardens. Other dislike nearby or adjoining commercial properties like pubs or fast food outlets. Flooding has become a major issue and part of my service is to conduct a flood check. If you have not flooded in the last five years, there are lenders for you. Others automatically reject if your property is within a flood zone.

4. Our second meeting

I check nothing has changed in your circumstances like family solutions, changed mind on moving, selling up, and moving in with others. We discuss my research findings and we will examine a lenders illustration where it shows the likely amounts, the costs and the terms of the plan. Adjustments can be made as necessary and with the current technology , can produce an alternative illustration at the meeting. If acceptable at that point, you can proceed to an application.

5. Application process

Many lenders accept on-line applications so we can usually get confirmation of acceptance at our second meeting. Acceptance at that stage does not mean an offer. It actually means that the lender thinks your property is acceptable to them from what they have on an application.

Survey: A lender will instruct a surveyor who will arrange to visit your home. The surveyor will check for obvious signs of defects like cracked walls, condition of the property, the roof, and electrics. If you have a cluttered home or rooms where you store a lot of your possessions, a surveyor may refuse to give a valuation. They need to be able to inspect all the main walls and need reasonable access to the rooms. They do go into the loft to inspect for spray foam insulation, damp and general condition of the roof timbers. They may ask for additional reports from timber and damp and/ or electrical specialists.

Solar panels: If you have solar panels of any description, please declare this on initial contact. If you own the installation and have the Micro-generation certificate, receipts, service agreements or invoices, we can continue. If you did not pay for the installation, there needs to be further discussion on the way forward. You will need to produce the Micro-generation certificate and a copy of the lease. Be aware that the lease will need amending and this can take many months.

Offer: If the survey goes to plan, the lender will produce an offer. The offer depends on the lender and is usually expected to complete in 4-6 weeks. Some lenders allow a bit longer especially where work is requested or Land registry has to make amendments like adding or removing a name from the title.

Solicitor: The lender will have their own solicitor who will liaise with your solicitor. You are free to choose a solicitor of your own choice. However, your solicitor may not be conversant with equity release or realise that they have to sign to say that the legal advice is compliant with the Equity Release Guarantee. Most solicitors do not carry the professional insurance to operate in this market so do ask before appointing them. If you are unsure, I have a panel of specialist solicitors who offer my clients a fixed fee service. This can be quite valuable when you consider that your local solicitor may charge £150+ vat per hour. The panel solicitor is completely independent and only acts for you. They will often offer a home visit in the fixed fee which saves you travelling, parking etc. This is especially useful where mobility of health issues prevent travelling to city centres.

Your solicitor will receive a copy of your offer and write to you regarding the legal aspects of the plan. Equity release is now a well established financial product and with hundreds of thousands of existing customers, is a tried and tested contract. You are required to return a copy of their report along with some other documents as required. Once received, they will arrange to meet you, either at home or in a local office. Meeting a solicitor face to face is a mandatory requirement and a safeguard. The solicitor has to check that there is no pressure from any other person to release funds from your home. An example of coercion could be a daughter with mortgage debt and facing re-possession. The daughter may be one of two or more children where the others are unaware of her debts. The daughter may want to accompany her mother to the solicitor and control the meeting. The solicitor will want to meet the mother separately, check her independence and mental capacity.

If all goes to plan, the solicitor will ask a client to sign the mortgage deed and prepares a file to be sent back to the lenders solicitor. If all acceptable, a completion date is set for funds to be released.

Completion: Usually six to eight weeks after the application. On the day, funds are sent from the lender to their solicitor. If there is an existing mortgage or any secured charge on your home, that will be repaid from the amount released. So for example, you applied for £50,000 and you had a Halifax mortgage for £25,000. The Halifax receives £25,000 and release their charge on your home. At the same time, your equity release lender places their loan on your title at Land Registry. The balance of £25,000 is sent to your solicitor. Your solicitor deducts their fee and my adviser fee and sends you the balance. If you applied in joint names, the solicitor will need a joint account to pay the funds unless the other partner gives explicit permission.

A lender will send you an annual statement. You can always contact me at anytime if you need further assistance in the future.

To understand the features and risks of a Lifetime Mortgage, please ask for a personalised illustration.

Request a free call back