Glossary of terms
Authorised and Regulated firms have taken specific steps to be authorised by the Financial Services Authority (FSA), and are bound by the relevant rules and regulations in order to provide consumers with greater security and peace of mind.
A beneficiary is person or other legal entity who receives money or other benefits from a benefactor upon their death.
A drawdown is a form of Lifetime Mortgage plan that allows you to release equity from your property in multiple stages. This means that you can draw down the cash advances you require when you like, from a maximum amount available. Interest is only charged on the amount that you have elected to drawdown, and is rolled-up and added to the loan amount. When your home is sold, the total drawn-down loan amount and the rolled-up interest, is repaid.
An Early Repayment Charge is a fee charged by some Lifetime Mortgage providers to customers who wish to pay their Equity Release loans back early.
The equity, or value in your home, is the open market value minus any mortgage or other debt you have secured against it.
Equity Release is a secure way to release the tax-free cash from your home, without having to move out. The two main types of Equity Release plans are Lifetime Mortgages and Home Reversion.
Estate is the word that describes is all of the possessions – including property, savings and/or debts – that one owns at a particular time, usually on their death.
An Equity Release Specialist is someone who has passed relevant exams to become fully qualified to advise on Equity Release plans.
The Financial Services Authority (FSA) is the regulatory body that oversees much of the financial industry within the UK. All genuine Equity Release is regulated by the FSA, who aim to make the Equity Release process completely transparent by creating a market that is fair to consumers.
A fixed repayment Lifetime Mortgage enables a client to release a cash lump sum from their property, but unlike most other Lifetime Mortgage plans the original loan amount does not accumulate interest over time. Instead, when the house is eventually sold, the lender receives a higher amount than the client originally borrowed from them. This amount is agreed in advance with the lender, and is used repay the loan on the sale of the property.
Home Reversion plans enable you to sell part, or all of your home to a reversion provider for a fixed tax-free lump sum, regular income, or a combination of these. You are granted a guaranteed lifetime lease, meaning you can continue living in the property for the rest of your life.
Inheritance Tax is a charge levied by Government onto an estate when somebody dies. Equity Release can be a way of reducing Inheritance Tax liability.
Interest is the charge added to the Equity Release loan over a period of time. This amount can vary between the different Equity Release plans available.
A Lifetime Mortgage is a form of Equity Release that enables you to borrow a sum of tax-free money secured against your home, whilst retaining full ownership of the property.
A secure lifetime lease is provided to clients who partake in a Home Reversion plan. This ensures that once they have sold their property to the reversion provider, they can remain in their home for the rest of their lives. In the case of joint applications, this applies to both parties.
A Personal Illustration is a recommendation based on a client’s specific requirements.
Customers who participate in an Equity Release plan with a No Negative Equity Guarantee will never owe more than the value of their home.
Roll-up interest is applied to a particular form of Lifetime Mortgage. The plan does not require you to make any repayments, instead “rolling-up” the interest and adding it onto the initial loan amount. When you pass away or move out of your home, the property is sold and the money from the sale is used to pay off the original loan plus any interest that has accrued over the loan period.
Safe Home Income Plans (SHIP) is a trade body formed in 1991 aimed at providing greater consumer protection.
A state benefit (such as pension) is money given by the Government to eligible individuals in the United Kingdom. Equity Release my affect an individuals’ eligibility for stage benefits.
SYH Charterhouse provide whole of market advice, meaning that we search and advise on all Equity Release plans available in the market. This ensures we find the very best plan to suit your individual requirements.