The Question
Please could you advise me on how repayments for equity release plans work? I’ve heard you can start paying down earlier if you are able. But I also understood the concept was that it was paid off when the policyholder died or went into care.
I would be grateful for some clarity.
Mark’s Answer
Hello, I can confirm that here at Equity Release Supermarket we are proud members of the Equity Release Council which is a trade body that represents our industry and sets standard for advisers, providers and solicitors.
I can confirm that all providers of Lifetime mortgages must have the option to make capital payments of at least 10% per annum without penalty, a standard insisted as a mandatory requirement by the Equity Release Council.
Furthermore, the plan must be repaid without penalty if you pass away or need long-term care. Therefore, you can ‘pay it down’ once your plan has completed by making flexible, voluntary payments.
As noted above, you can make payments of up to 10% per annum without penalty, and you can make these payments on a monthly, quarterly, annually, or adhoc basis, the decision is yours.
You can also decide how much the payment will be and have the ability to stop and start them at your discretion.
For example, if the interest rate is fixed at 6%, you could make a 6% payment to cover the interest charged, and a further 4% payment to reduce the capital balance, the decision is yours.
If you are committed to making payments over a set period of time, some providers will give you a discount off the fixed rate of interest as incentive to make payments.
However, rest assured, if your circumstances changed in the future, you could simply stop making payments, and you would only lose the discount with no penalties.
As there are several product options for you, I would suggest that you discuss your personal requirements with one of our specialist advisers without obligation, and they can explain your options in more detail, linking the best solution for your personal requirements and circumstances.
Meet our expert…
Mark Gregory, founder and CEO of Equity Release Supermarket, is here to answer your questions. Mark is an adviser himself with over 20 years equity release experience.
He launched Equity Release Supermarket 10 years ago and it has grown to become one of the UK’s leading equity release specialists.
Email kate.saines@emap.com to ask Mark a question
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