4 Mistakes to Avoid When Choosing an Equity Release Adviser
Updated: Aug 19, 2020
1. Do not contact an equity release provider directly. Instead - always enquire with an Independent, Whole of Market Adviser.
Why? Simply put, because one of the most important things to compare is the cost of the equity release loan.
Many providers will refer you to their own advisers, or an advice firm that only recommends their equity release plans. They may not have a plan that meets your requirements in full, or the plan they do offer may be more expensive than that of another lender with the same plan at a lower interest rate.
An Independent, Whole of Market Adviser can offer a wide range of equity release plans and can show you the difference in cost from one provider to another.
They should always recommend the lowest cost plan that meets your requirements. This could mean that when the equity release is repaid it costs thousands, or even tens of thousands of pounds less than if you had made the mistake of going directly to an equity release provider.
2. Always ask your Independent, Whole of Market Adviser if they offer a price match guarantee.
Why? Some advice firms have the benefit of being able to offer some of the same equity release plans as other advice firms at lower interest rates, which again means you could
make a saving when the equity release is repaid.
It's much like the difference in the cost of buying from a supermarket, who are able to offer products much cheaper than a small independent shop as they do not buy as much bulk. Some equity release providers offer lower interest rates to the bigger adviser firms.
Some advice firms also have exclusive access to specific plans - that no other advice firm can offer.
The price match guarantee is really offered to show confidence that you will not get a lower rate from the same plan with a different advice firm appointed and if that ever is the case then the original advice firm will usually pay around £250 on production of a lender illustration to evidence.
3. Always ask your Independent, Whole of Market adviser if they are equity release advisers, or if they also advise clients on a range of financial services products (mortgage advice, pension advice, tax advice).
Why? Much like the difference between a GP and a specialist, the specialist equity release adviser is an expert not a generalist. The regulator for financial services in the UK (the Financial Conduct Authority) has previously warned advisers against 'dabbling' in giving equity release advice.
The equity release lenders offer an ever-changing range of plans and options and ensuring you get the right advice is essential to achieving your desired outcome.
Would you trust an adviser who only arranges a few equity release plans as a tiny fraction of their overall business, or an adviser whose sole focus is delivering advice on equity release?
4. Ensure that your Independent, Whole of Market, Equity Release Specialist considers whether equity release is the most suitable financial solution for you.
Why? If you went to the Doctor with a headache he may uncover that is actually eye strain and you need glasses, not migraine medication. An equity release adviser is required to consider whether to solve your financial headache, there may be a different solution than an equity release plan.
Some people may be able to secure a more suitable financing solution, such as a personal loan or one of a range of other solutions. An equity release specialist is required to discuss alternative solutions with you and you may find there is a solution more suitable than an equity release plan.
A recent report from the Financial Conduct Authority showed that some advisers had not considered vital information when recommending an equity release plan, which could then cost the client thousands or pounds (or more) unnecessarily, or worse - equity release may not have been the most suitable financial solution.
Never be afraid as a customer to ask challenging questions to your adviser and only proceed with them if they are an Independent, Whole of Market, Equity Release Specialist.