*Updated April 2024*

Questions to ask your equity release adviser

The good news is that choosing an adviser who’s an Equity Release Council member means they will follow a set checklist to ensure you’re clear on the risks and long-term implications of equity release. However, even the best adviser is only human, so it’s worth having a bank of questions in your back pocket to make sure you’re not only given all the information you need, but you understand it too.

If you’re not sure what to ask about equity release, I’ve pulled together this list of useful questions you can ask if you’d like anything explained in more detail or want a particular point clarified.

“Might another funding option suit me better?”

Your equity release adviser is required to take you through all the alternatives to equity release upfront, so be sure to ask if they haven’t. You need to be satisfied that you’ve considered every possible option available to you before committing to equity release.

For example, not having to make monthly repayments on a lifetime mortgage might appeal to you, but if you can afford to make a monthly contribution, another type of later life mortgage might be more appropriate.

The key thing is that if equity release isn’t suitable, your adviser should caution you against it and explain why alternative forms of funding may be more appropriate.

“What are the upfront and ongoing costs of equity release?”

This is probably your most burning question. If you and your adviser agree that equity release could be a good fit for you, they should fully break down the costs involved, including what they will charge for advising on and arranging the lifetime mortgage, lender’s fees, valuation fees, fees for legal advice and any other costs you may incur. See our article 'How much does it cost to release equity' for further information.

Your equity release adviser should also clearly set out what the plan could cost you over time once the rate of interest, the effect of compound interest and the impact on your estate is taken into account.

“Can I repay my loan early if I want to?”

It’s good to know whether you’d be free to repay your loan early if you were in a position to as many lenders will impose an early repayment charge (ERC) for doing so.

“What product features might be useful to me?”

Lifetime mortgages now come with a host of options enabling you to tailor your plan more closely to your needs. For example:

• Drawdown facility – enables you to draw cash from your loan only when you need it. As well as being convenient, it also helps reduce the effect of compound interest, as you only pay interest on what you’ve taken.
• Flexible repayments – enables you to make regular or one-time repayments, which can help contain the amount of compound interest you need to repay.  
• Downsizing protection – allows you to pay off your loan without incurring an early repayment charge if you choose to downsize – subject to your lender’s downsizing criteria.
• Inheritance protection – enables you to earmark a percentage of your home’s value for the beneficiaries of your estate.

Getting a detailed overview of all the features and the different types of equity release out there will help you pick the plan that will work best for you.

“What happens to my equity release plan when I die?”

No one likes to think about this, but it’s a sensible question to have answered, both for you and your family. Knowing what happens to your equity release plan when you die means you know what will have to be done when the time comes and you and your loved ones can plan for it together.

“Am I protected if things go wrong?”

Asking your adviser to explain the safety measures in place for unforeseen situations, like a sudden sharp drop in house prices, can help put your mind at ease.

All products provided by ERC members come with safeguards designed to protect you, including a ‘no negative equity guarantee’. This ensures that you (or your estate) will never owe more than the value of your home when it’s sold, even if that isn’t enough to pay off your loan.

If your equity release provider ceases trading, your plan should be transferred to another lender, keeping the terms and conditions you agreed to.

“What are the tax implications of equity release?”

Releasing equity will have tax implications both positive and negative, so your adviser should explain these to you before you commit to a plan.

Some of the positives include:

• The cash you release is tax free
• You reduce the value of your estate and therefore the amount of inheritance tax you have to pay
• You could gift the money during your lifetime rather than as an inheritance (which is potentially exempt from IHT if you live for another 7 years)

Asking your adviser about the pros and cons of equity release and how it could impact your tax liability is a good way to decide if it’s right for you.

“Will releasing equity affect the benefits I receive?”

If you receive state benefits, this question is an important one. The money you release will be classed as savings, so may mean you’re no longer entitled to some means-tested benefits. Make sure your financial adviser explains how your benefits could be affected.

“How long will the process take to complete?”

Ask your adviser to explain the application process and the hoops that will need to be jumped through before your mortgage can be completed and the money made available to you. For example, your adviser can tell you at what point you’ll need to speak to a solicitor and what steps the lender will need to take before your application can be approved.

I hope these questions help you prepare for your meeting with a financial adviser and give you the confidence to ask for further clarification if anything is not clear to you. Remember, it’s your adviser’s duty to ensure you thoroughly understand equity release and the alternatives available to you, so they’ll be happy to answer all your questions.