First of all, if you’ve taken out equity release or you’re considering it, it’s worth knowing that you can always make complaints about equity release via Resolver if something goes wrong.
If you try to make a complaint and your company doesn’t show up, let us know! Since this is a relatively new service for us, we haven’t loaded every company onto the system yet.
The majority of the complaints we’ve seen have been about mis-sold lifetime mortgages.
If you’re taking out equity release, you’re most likely to be using a lifetime mortgage plan to do so.
This is where you take out a mortgage secured on your home, keeping full ownership of the property. You can either make repayments or let the interest build – the full loan has to be paid back when you die or if you have to go into long-term care.
If you have a lifetime mortgage, you typically won’t have to make any payments while you’re alive – but you should be careful, as any unpaid interest is added to the loan, meaning your mortgage debt can increase very quickly!
Daily interest is calculated and charged monthly on the loan, and will be paid off from the value of your estate when you die. However, if there isn’t enough money left in your estate to pay off the value of your loan, your family and other beneficiaries will have to repay any extra!
To avoid this, you should make sure that you get a “no-negative-equity guarantee” from the equity release firm. This means that you’ll never have to pay back more than the value of your home. Most lifetime mortgage plans include this guarantee.
With a lifetime mortgage, you can normally borrow up to 60% of the value of your home – this also depends on your age, with the amount you can borrow increasing with your age at the time you take out the plan.
When you were sold an equity release plan, you should have been clearly advised on all costs and consequences of the plan. If you were incorrectly advised as to the benefits of a plan, were not clearly advised of the potential consequences, or were otherwise poorly advised, you may have been mis-sold the plan.
We’ve also seen complaints about fees for home reversion plans.
With a home reversion plan, you agree to sell all or part of your home. You’ll get either a lump sum or regular payments and can continue living in your house – but you have to maintain and insure it. At the end of the plan, your property is sold and the home reversion plan is paid off. You can set out some of the property to be held as inheritance for your family or beneficiaries.
Home reversion plans normally pay out between 20% and 60% of the value of your property.
Some providers insist that you’re at least 60 before they’ll let you take one out.
Always check the level of maintenance you’ll be responsible for, check that you have the right to move to another property, and check that the plan has a “no-negative-equity guarantee” – meaning your family and beneficiaries won’t have to pay more than the value of your loan if there isn’t enough money to cover it.
Any fees or charges involved with an equity release plan should be made clear to you before you agree. If they were not, you may have been mis-sold the plan.
We hope this helps! If you’ve got a complaint about equity release, visit Resolver to get it sorted.