Equity release schemes are principally aimed at older home owners who want to unlock the capital in their property either by way of lump sum, extra income or a combination of the two.

There are a number of different schemes available but they are currently unregulated and we would advise that you exercise caution before proceeding. We would recommend that you have a look at the Age Concern or Help the Aged web sites for some very useful practical advice – www.helptheaged.org.uk or www.ageconcern.org.uk

You will see that the equity release industry is constantly changing and increasing in popularity year on year.

There are a number of different schemes but the main ones are summarised below:-

• Lifetime mortgages – you borrow money that is secured against your property (just like a mortgage). You either borrow money at a fixed rate that is repayable by your estate on death, the amount owing rising with every year that you live. This is known as a rolled-up interest loan. Please bear in mind that death is not the only trigger point at which repayment may be required and that you must ensure that there is a ‘no negative equity guarantee’. Alternatively there is also an interest only loan where you make a monthly interest repayment with the capital repayable when the house is sold. This is a less common variation.
• Reversion schemes – with this scheme you sell some or all of your home to an investment company and continue to live there as a ‘tenant’ for the rest of your life. The investment company receives a share on sale of the property that is proportionate to their interest in your property. Please note that you may not receive market value for the share of the property you sell as there are various factors eg age and sex that will determine this
• Home Income Plans – a system by which you raise a loan that is secured against your home but part of this loan must be used to purchase an annuity, part to pay interest, the rest as cash.

In any case you should always seek expert independent financial advice before proceeding and also discuss it with your family (because there will be inheritance implications) as well as the DSS, local authority or CAB (as there may be welfare benefits implications).

Please refer to the checklist below outlining what happens in an average transaction:-

What Martin-Kaye do

• Obtain your title deeds
• Check the title in full
• Make all necessary searches
• Receive and check your loan offer and ensure that we are able to comply with all the terms and conditions
• Forward all documentation to you for signature with full explanatory notes and ensure that you understand the contents
• Obtain redemption statements for all secured lending and draft and forward a completion statement (financial summary) for your approval
• Agree completion date with you and request mortgage funds to arrive on that date
• On completion day – pay off all secured lending (where applicable), send balance funds to you
• Register the new loan at the Land Registry

What you need to do

• Take independent financial advice to be sure that the product is right and you are aware of all the potential consequences
• Take a look at one of the recommended web sites for more information
• Have a look at the SHIP website to ensure the lender you have selected is a member of the voluntary regulatory group
• If you own the property outright obtain the title deeds and forward them to us
• Ensure that your lender arranges a valuation of your property
• Make sure that you have appropriate buildings insurance in place