Here is a helpful list to help you understand the many terms you will read about when you consider equity release.
The amount of interest that has accumulated on a plan over time.
A fee that you pay the lender, usually to reserve the funds for a mortgage or lifetime mortgage.
Benchmark Interest Rate
This is an interest rate used by some providers in calculating an early repayment charge.
Insurance that covers physical damage to a building as opposed to its contents. Equity release plan holders are required to have adequate buildings insurance to the value of their property.
You may be eligible to receive financial support from the State, such as Council Tax Benefit, if you are on a low income or have certain costs to meet because of your personal situation.
An amount of money advanced to a plan holder under the equity release plan
The amount of money available from a provider, from which the initial cash advance is taken.
Legal papers that establish who owns a property and names anyone who has an interest in its value.
Taking a cash advance from your pre-agreed cash facility. This is done after the initial cash advance is paid. Only when drawdown is taken does the interest start being charged on the drawdown amount.
Drawdown Lifetime mortgage
A lifetime mortgage that allows a customer to draw down funds in stages as and when required. This means you only pay interest on the amount borrowed at any one time.
Early Repayment Charge
A fee applied by some mortgage companies should you choose to repay your mortgage early. This charge is only applicable in certain instances and will vary from provider to provider.
Equity is the value of your home minus any outstanding mortgage or other debts secured against it.
An equity release plan allows you to release tax-free cash from your home in the form of a cash lump sum or regular drawdowns, usually with no monthly repayments to make.
Equity Release Council
An industry trade body that helps to ensure products are safe and accessible for consumers.
Includes your home, possessions and any savings or investments.
A Financial Adviser provides financial advice based on an individual customer's needs, offering the most suitable and competitive product from the range of providers available to them.
Financial Ombudsman Service
An independent and impartial complaints scheme which aims to settle disputes about financial products or services.
All of the plans that Just Retirement Solutions Limited recommends have fixed rates, which means that the interest rates on the plan will never change throughout its term.
Financial Conduct Authority. The UK's financial regulator set up by the Government to regulate financial services and protect consumer rights.
Home Reversion Plan
A form of equity release, where the customer sells all or part of their home in return for a regular income or cash lump sum or both, and continues to live in their home for as long as they wish.
Initital Cash Advance
The amount advanced to plan holders at the start of an equity release plan.
The charge made by lenders on money you borrow fom them. Interest can be variable (goes up or down) or be fixed
Key Facts Document
Important information set out in a standard way, so you can compare services, products and costs.
Key Facts Illustration (KFI)
Important information about the financial product you are buying, describing key features and risks.
A loan secured on your home. Normally no repayments are made on the loan until the death of the last surviving policy holder or their move into long-term care.
Loan to Value Factor
The maximum amount that can be borrowed against a property based on age and sex of the youngest applicant and the property value.
The fee you pay to a solicitor for their services.
No negative equity guarantee
A guarantee to ensure you will never owe more than the value of your home
Open Market Value
The value of the property should it be sold on the open market
If you wish to move home you may be able to transfer your lifetime mortgage to a new property if the new property is acceptable to the lender. If you transfer your lifetime mortgage to a new property, the lender may reduce your Cash Facility and you may need to repay some of the Amount Owed.
A fee paid to a lender to cover the inspection of your property.