Which Equity loan is right for you?

This will depend entirely on your circumstances. However, statistically over 90 per cent of people taking equity loan schemes today do so through a lifetime mortgage in preference to a home reversion scheme. So much depends on your own personal circumstances. For example, how much home equity can you release and how much do you need to borrow? The amount you wish to borrow and your age would have some bearing on which sort of equity loan scheme would suit you best.Those in their early 60s and those with lower-value properties may find that a lifetime mortgage does not release enough cash to accommodate their needs.

Other factors to take into account could be:

Do you need an up-front lump sum or a regular income?

How do the different schemes’ draw-down facilities compare?

Your attitude to risk and how you think property prices and interest rates might change in the future

The value of your property and how much of this value, if any, you would wish to leave as an inheritance.

You should seek professional advice from an adviser who has access to all the best equity loan schemes and can help you decide whether equity loan release is right for you – and if it is, which loan scheme is the most appropriate for you. Most equity loan providers are members of SHIP (Safe Home Income Plans), a voluntary organisation launched in 1991 and dedicated to the protection of the consumer, to ensure that equity release loan schemes are promoted in a way that is fair and easy for all to understand.

All SHIP members pledge to observe the SHIP Code of Practice. They display the SHIP logo in their brochures and other printedmaterial as a guarantee to their customers.

The SHIP code of practice is:

Members of SHIP agree to provide a fair, simple and complete presentation of their equity loan schemes.The benefits, obligations, variables and limitations must be clearly set out in their literature, including all costs which the applicant has to bear in setting up the scheme, the position on moving home, the tax situation and the effect of changes in house values. The solicitor of his or her choice will always perform the client’s legal work. In all cases, prior to the completion of the equity loan the solicitor will be provided with full details of the benefits the client will receive.The solicitor will be required to sign a certificate to the effect that the equity loan scheme has been explained to the client.

The SHIP certificate will clearly state the main cost to the householder's assets and estate e.g. how the equity loan amount will change or whether part or all of the property is being sold. All SHIP schemes carry a ‘no negative equity’ guarantee i.e. you will never owe more than the value of your home. For the above reasons, it always makes sense to choose a lender who is a SHIP member (see website: www.ship-ltd.org).