AAnnuityAn annuity provides you with an income in exchange for a cash lump sum. The income is determined by your age, health & sex at commencement.
Annual Percentage Rate (APR)It is a tool used to compare the overall cost of a product. The formula used combines the interest rate, length of loan, fees being charged & any other compulsory insurance.
Arrangement FeeA charge levied by the lender on completion of the plan
CCompound InterestA system whereby interest is charged on the loan amount, as well as on previously accrued interest.
DDrawdown PlanIs based on a lifetime roll-up mortgage, but has greater flexibility. You can take your cash in stages rather than taking the whole lump sum upfront. The drawdown plan therefore charges you less interest & would be more beneficial for your family.
EEarly Repayment Charge (ERC)Equity release is designed to run for the rest of your life. Therefore, if your plan is repaid early some lenders will charge you a fee as a consequence.
Enhanced (or impaired) Equity Release
If there has been a history of poor health, then an equity release lender may offer enhanced terms. This means the equity release provider will grant an additional lump sum compared to standard terms. To find out how much check our equity release calculator.
EquityThe market value of your home, less any mortgages or loans secured upon it.
Equity ReleaseA method of raising a capital lump sum, or income, from the value of your property. You will have the right to remain in your property for the rest of your life & there are usually no monthly repayments.
EstateRefers to all your assets, including your home, personal possessions & any savings or investments.
FFace-to-Face AdviceOne of the options of how you can receive Independent advice from Equity Release Supermarket. The meeting with our specialist adviser can be in the comfort of your own home. The adviser will discuss your requirements & offer advice accordingly. Please note you are under any obligation to proceed.
Fixed Interest Where the interest rate charged remains exactly the same for a set number of years or for the duration of the plan. The benefit of this for a lifetime mortgage is that the exact balance will be known at predetermined dates in the future.
FreeholdThis means the proprietor of the land has absolute ownership of the land & the property that stands upon it.
Financial Services Authority (FSA)Is an independent non-governmental company that regulates all financial services in United Kingdom. It also regulates the equity release market and its aim is to make sure that consumers are protected from poor advice or unfair sales methods.
HHome Income PlanA cash lump sum is raised & secured upon the property. The lump sum then purchases an annuity which gives an income, usually for life.
Home Reversion PlanPart or all of the property is sold to a reversion company in return for a lump sum or income. You have no monthly repayments & continue to live in the property, usually rent free, for the rest of your life.
IIndependent Financial Adviser (IFA)Offers unbiased advice on financial matters& can recommend financial products from the whole of the market. They must offer you the choice of options regarding their remuneration.
Inheritance Tax (IHT)A tax which may be levied on your estate when you die. All assets within your estate are amalgamated & once the inheritance tax threshold has been exceeded this will be taxed at 40%. Equity release can be used as an important tool in IHT mitigation.
Initial Disclosure Document (IDD)Informs you about the range of services & products your adviser offers. It will also outline the various fee & commission options available & whom they are regulated by.
Interest Only MortgageA loan whereby only interest is paid back to the lender each month. Therefore, as no capital is repaid, the final balance will be the same as that originally borrowed.
KKey Facts Illustration (KFI)Is the quotation that summarises all the important features of the product and must be clear, fair and not misleading. This includes the service levels, product summary, charges & commissions.
LLeaseholdA form of land tenure where a person has rights over a piece of land for a specific period. Most residential leases have long terms and are usually set initially at 99 years or 999 years.
Legal FeesThese costs include the solicitors owns fees which include client report preparation, request of funds & signing the SHIP certificate. There are also disbursements which include title enquiries, land registry fee & possible Indemnity insurance with some providers. Equity Release Supermarket has negotiated fixed costs with two leading specialist equity release solicitors in England & Wales – Equilaw & Homeplus
Lifetime LeaseThis is a legal facet of home reversion plans whereby you have the guarantee to stay in your home for the rest of your life, usually rent free.
Lifetime MortgageA type of equity release where a loan is secured against your property in order to release a lump sum or income. There are usually no monthly repayments and the loan is repaid on death or on moving into long term care.
NNo Advice FeeA unique feature offered by Equity Release Supermarket. Upon enquiry through our website & proceeding from application to completion via the telephone/post, for a limited period we will not charge an advice fee for our services.
No Negative Equity GuaranteeUnder SHIP rules all schemes have this protection included. It guarantees that on death or moving into long term care, your estate will never owe more to the lender, than the property is sold for.
pProviderAre the lenders that supply the equity release plans. Equity release providers generally recommend customers seek specialist financial advice before committing to an equity release plan in order that they fully understand all the features and risks involved.
RReserve FacilityA feature of drawdown lifetime mortgages. This is the remaining amount of cash available after you have taken your initial tranche of money. This reserve facility then holds the remaining funds available for you to withdraw in the future.
Roll-UpThe mechanism by which the interest is added to the loan balance on a monthly or annual basis.
SSafe Home Income Plans (SHIP)Independent trade body set up within the equity release industry dedicated to protecting customers. They have helped develop products that are secure & simpler to understand. Membership is voluntary & providers will follow a code of conduct in accordance with SHIP guidelines.
State BenefitsEquity release can affect certain means tested benefits provided by the state including pension credit & council tax benefit. Equity Release Supermarket has a research tool to ascertain whether there will be any impact on such benefits. Alternatively, you should contact the Department of Work and Pensions.
TTreating Customers Fairly (TCF)Is a recent industry initiative which challenges firms operating in retail financial markets collectively to make a step change in their treatment of customers. Examples include providing clear information & being kept informed before, during and after the point of sale.
VValuation FeeUsually an upfront charge made by the lender to cover the costs associated with the survey of their property. This will provide information on the properties market value & condition for lending purposes.
WWhole of MarketSuch an adviser can source products from the whole marketplace, thereby having access to all lenders products in order to offer financial advice.
'the complete equity release service'