Mis-sold Mortgage Claims > Mortgage News
Warnings for Mis Selling of Equity Release
Wed, 25 Jan 2012
New ways to assist homeowners plan for their future care needs have been discussed this week, with the government commencing a new round of cross-party talks.

A new equity release investigation by Which?, the consumer group, has discovered that until new funding rules have been introduced, homeowners who need to raise cash are at risk of being wrongly advised about equity release .

The Which? investigation found advice on equity release is "wanting", with almost a quarter of qualified advisers failing the benchmark test.

Equity release schemes, otherwise known as lifetime mortgages, are lending arrangements for those aged over 55, which enable borrowers to receive a lump sum, or access to finance, secured against the value of their home.

The borrower is able to remain in the family home, without paying rent, with the loan, plus interest, only repaid when the property is sold or when the borrower and his/her partner die or move into long-term care.

Such lifetime mortgages may offer a solution for the cash-poor, however, not for the asset-rich individuals who want to stay in their own homes. For the latter, lifetime mortgages can have considerable disadvantages, especially the cost.

As interest on lifetime mortgages mounts up, the debt can actually double after a decade.

Hence, consumer groups recommend consulting advisers who have specialist qualifications in both equity release and home reversion, which is another option to enable older people to unlock cash from their homes.
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