How to choose an equity release adviser

Gone are the bad old days of equity release. Today equity release providers are regulated by the Financial Conduct Authority and Equity Release Council members commit to its code of conduct. This means that equity release now has more customer protections in place than many other forms of borrowing, making it safer than ever before.

One such protection is that you must have spoken to a suitably qualified financial adviser before deciding if equity release is the best way to achieve the outcome you want. There’s a lot to weigh up and no guarantee that it is.

Your adviser must be satisfied that you fully understand the terms and conditions, are of sound mind and aren’t being coerced into taking out equity release. They will also speak to your family to make sure they are comfortable with your decision before you commit.

This is why it’s important that you find an adviser you trust, so you can have confidence in the quality of the advice you’re given. In this article, I’ll share some useful tips to help you track one down.

 

How to find an equity release adviser

If you don’t already have a financial adviser, asking friends, family or colleagues for a personal recommendation is a good place to start, particularly if they have spoken to someone about equity release.

If not, you could visit unbiased.co.uk to search for a reputable adviser in your area suited to your needs.

Before speaking to an adviser or company, check Trustpilot or Feefo for reviews based on other people’s experience of their service. While positive reviews may only tell you so much, lots of negative reviews are a clear warning sign.

Why not start by taking a look at reviews about us – Simply Equity Release – and Age Partnership, the award-winning retirement specialist we’ve chosen to work in association with.

Six questions to ask your equity release adviser

Once you have a potential candidate, you need to be satisfied that they’re up to the job. Like any profession, some advisers will be better than others and, sadly, there’s still the odd rotten apple out there.

Here are six questions I think are worth asking before you agree to them advising you on equity release. Doing so can give you a sense of whether they really know their stuff, are able to explain things clearly and can be trusted to do right by you. It also shows them you’ve done your homework and aren’t going to sleepwalk into a big financial decision.

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1. “What qualifications do you have?”

To advise you on equity release, a financial adviser must hold a level 4 qualification recognised by the FCA as a minimum, which they should be able to show you. A good adviser may also have other specialist qualifications.

This is a great question to open with because the answer will tell you whether they have the right level of expertise (if not, there’s no need to go any further) and clearly show them that you know what’s what.

2. “Is the advice you give limited to certain providers?”

A financial adviser may be independent or ‘tied’, meaning they can only advise on a certain provider or providers’ products. Talking to a tied adviser isn’t necessarily a negative, particularly if they work with a range of lenders, but an independent adviser will be able to offer a wider scope of options.

Age Partnership, for example, choose to work closely with a select panel of lenders who are all members of Equity Release Council. Maintaining these long-standing relationships enables them to negotiate exclusive deals you may not be able to find elsewhere.

3. “Do you advise on all types of equity release?”

This is a good question to ask before you go any further, so you understand if they’re qualified to give you advice on alternative types of later life lending, such as a retirement interest-only mortgage (RIO), or if their advice is restricted to certain products.

Your adviser should clearly explain any limitations to their advice. If there are any, it’s worth bearing them in mind during your meeting because you want to leave no stone unturned.

4. “Are you a member of the Equity Release Council?”

You should expect your adviser to be a member of the Equity Release Council.

As a member, your adviser has agreed to follow the ERC’s rules and guidelines designed to protect customers and committed to giving you a straightforward and fair explanation of your equity release options and the alternatives to consider first. They should also be clear with you on its risks, limitations and your contractual obligations.

Members also agree to follow a prescribed process, including working through a set checklist, which I’ll go into in more detail in the next article in this series What to expect when you meet with your equity release adviser.

5. “Are the providers you work with Equity Release Council members?”

Ideally your adviser will only work with lifetime mortgage lenders and/or home reversion plan providers who are Equity Release Council members, so you will be protected by its safeguards and product standards, including:

• The interest on a lifetime mortgage must be a fixed rate or a variable rate capped for the life of the loan.
• You must be allowed to stay in your home for the rest of your life or until you move into long-term care.
• You must be allowed to move home as long as your new house is acceptable to your lender.
• A lifetime mortgage must come with a “no negative equity guarantee” so your estate will never owe your lender anything more than the sale proceeds of your home, even if this falls short of the outstanding loan.
• You must be allowed to make repayments without being penalised, subject to lending criteria.

 6. “What are your fees and when must these be paid?”

This is an important question from a practical standpoint as you need to be sure your adviser’s fees are reasonable, justifiable and affordable for you.

Even at this early stage, a good adviser should be able to give you an idea of their fees, which are likely to be a fixed price for their services or a percentage of the loan amount. Beware the adviser who is evasive or reluctant to talk about their charges before you commit.

They should also be able to give you an idea of the other costs involved in setting up equity release and when and how these will need to be paid, to give you a sense of what the total cost may be.