What’s the difference between financial advisers that are tied, use a panel and are whole of market? Find out below, in this article on equity release and things you should be aware of.
What is a ‘tied’ financial adviser?
A ‘tied’ financial adviser is advising directly to one specific lending company, and they are restricted to only offer advice about the products and services offered by that lending institution they may work for. Despite this limitation, they may have access to exclusive offers and do not need to spend time looking at all products on the market, this means they can offer a cheaper service.
What is a ‘panel’ financial adviser?
A ‘panel or restricted’ financial adviser is advising on a panel or selection of companies that have been chosen by the adviser. They are restricted to only offer advice about the products and services offered by the companies on this panel and they will disclose them to you when requested. Despite this limitation, they may have access to exclusive offers and do not need to spend the time looking at all products on the market.
What is a ‘whole of market’ financial adviser?
A ‘whole of market’ financial adviser will need to assess and take into account all financial products and lenders from a comprehensive market overview before giving advice. They will compare all options to recommend the most suitable and efficient product for your needs. This advice has the potential to give you the best product on the market that may save you a significant amount of money and give you the best and most suitable product for your individual circumstances that is available at that time.
Do you pay an equity release lifetime mortgage back monthly?
If you choose, you can make regular monthly interest only payments to your lifetime mortgage or a retirement interest only mortgage. You cannot repay a home reversion plan. If your equity release lifetime mortgage lender is a member of the Equity Release Council, you have the flexibility to make overpayments at your convenience subject to the individual plans criteria (often 10% of the balance each year). Typically, many providers permit partial repayments up to a specific percentage of the borrowed amount, without imposing any additional charges and can be as much as 40% of the balance each year, subject to plan availability.
How do you pay back equity release?
You have the option of either making regular or irregular payments, or allowing the interest to accumulate over time which is called compounding of interest. Lifetime mortgages are usually repaid when the last home owner leaves the property, either when they pass away or enter long term care, although they can be repaid at any time, sometimes this happens when downsizing, moving home or by other means if someone receives enough money to repay the mortgage.
Can you pay back an equity release lifetime mortgage early?
Yes. If you opt for a lifetime mortgage, you do have the option of repaying a larger portion, or the entire amount early. However, lifetime mortgages are designed as long-term commitments, so this choice might not be the most favorable. There may be an early repayment charge if you do this and this can be a substantial amount. Careful consideration should be taken about any expected reason for repaying your lifetime mortgage and discussed with your financial adviser. They will inform you of the different plans that have different early repayment charges, one of which may match your situation and the plan tailored to you.
How do they calculate interest on equity release?
The concept of compounding interest in lifetime mortgage equity release is as follows: each day of month, depending on the plan, the interest is ‘compounded,’ meaning that it’s calculated on the total of the initial loan, and the interest accrued during the preceding day or month. This cycle continues in this manner until the loan is repaid and the loan balance will increase compounding over time. Before you take out a lifetime mortgage your adviser will show you how your specific plan that is being recommended will increase or how much the interest will be each year with a document called a Key Facts Illustration.
For further information or if you have any questions, feel free to get in touch with Bower on 0808 169 8316. Alternatively, you can request a callback, send us an email, or message us through the live chat on our website.
At Bower, we will understand your unique circumstances and advise you to ensure you are receiving the best plan to meet your objectives. There are plans that allow you to make voluntary repayments and move home, subject to lender criteria. However, early repayment charges may apply in certain circumstances.
Equity release requires paying off any existing mortgage. Any money released, plus accrued interest to be repaid upon death, or moving into long-term care. Equity release will reduce the value of your estate and your entitlement to means-tested benefits now or in the future, and impact long-term care funding.
Bower Home Finance provides independent, impartial whole of market advice with an award-winning customer service experience. Initial advice is provided at no cost to you and without obligation. Only if you choose to proceed and your plan completes, would a typical advice and administration fee of £1,495 be payable.
If you are considering equity release, we strongly recommend that you read our equity release page carefully and talk to one of our specialists before deciding if you wish to proceed.
To find out more about any of the products and the service we provide, please call us on freephone 0800 411 8668, request a call back, email us, or join our live chat you’ll find on our website.
Please be aware that equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. All features and risks are thoroughly explained in your free personalised illustration.
