Equity Release Section

Equity Release Advice - Why It's Critical To Shop Around

On our sister site www.LearnMoney.co.uk it was recently highlighted that Equity Release advice is still very suspect. Read this article for more information.

Help The Aged Mystery Shopping Exercise

Mystery shopping is where an organisation sends people out incognito to test out the market to see what kind of service is being offered and promoted.

• The Charity Help the Aged recently got a '76 year old man' to call seven leading Home Reversion providers to talk about possible deals
• Home Reversion schemes are also called under the general term 'Equity Release' and it is where a homeowner sell part or all of their property in return for a lump sum
• Home Reversion schemes allow people to remain living in their property till they die or sell it - so if you live to 101 it's no problem
• Home Reversion is still a loan which means interest has to be charged
• This interest is 'rolled up' ie it doesn't have to be paid, instead it's added to the original loan which means the loan gets larger and larger
• But this means that property owners can only get a small percentage of the value of their property released but this does depend on age and general health
• For more information on Home Reversion see the Equity Release Guide on the LearnMoney.co.uk site

Back to the Age Concern Mystery shopper

• The man wanted to release £80,000 from a property valued at £280,000
• The difference of how much a percentage of the house needed to be ‘sold’ to the home reversion company was astronomical
• The highest firm wanted to take 62% of the property to release £80,000 with the lowest 48.5%

Summary

The importance of shopping around and perhaps more importantly doing plenty of research in the beginning cannot be stressed enough when looking at Equity Release deals as this Help The Aged survey proves.

One way to start to get a better feel for Equity Release and Home Reversion Schemes is to read these two important articles -

• How To Get a Better Equity Release Deal
• 4 Key Equity Release questions from the Actuarial Profession

See Also

• Help The Aged Charity website
• The LearnMoney.co.uk help section on Equity Release
• Find's list of Equity Release providers