The anatomy of a lifetime mortgage sale

The anatomy of a lifetime mortgage sale

Many people are interested in finding out more about certain financial products, but are worried about asking questions in case they commit to something they are unaware of. Sometimes it is just the fear that they will be hounded by telephone calls and pushy salesman for months afterwards. With this is mind here is a short guide on what to expect if you enquire about equity release, and the process involved if you wanted to pursue it.

1.      The Enquiry

In this new age, there are a number of ways to enquire. Writing remains a strong contender, but there is also the telephone and email. A lot of people prefer email these days, as it is more convenient, and there is no danger of being stuck on hold with a call centre, or even worse, with a pushy salesman. Enquiries can be as simple or as complex as needed, and nothing asked contains any reason to be obligated. The majority of new enquiries to the Equity Release Information Centre are only sent our free brochure on equity release, and a few simple questions answered factually. Some ask to go on our mailing list. We understand that the majority of enquiries are from people who are planning months or even years ahead.

2.      The Fact Find

After the enquiry stage, some clients wish to find out the specifics of what they can get, and what the terms and conditions are. This varies greatly between the many plans that are available on the market. To narrow things down, a qualified equity release advisor will conduct a fact find. This is usually a telephone conversation, but can be face to face if so desired. The advisor will ask about your financial situation and your preferences regarding inheritance and your aims and objectives regarding equity release. They will then research the market and make a recommendation of which equity release plan is most suitable for you, if any. They will send you the full details of this plan in the post. Again this is completely free and with no obligation.

3.      The Key Facts Illustration

The Key Facts Illustration is a technical term referring to the mortgage document that all mortgage companies must produce prior to a sale. It is personalised to the individual enquiry and shows things like the interest rate, the amount borrowed, what the interest payments will be, if any, and how much will be owing on the loan every year for the next 15 years. As interest rates are fixed this can be accurately predicted. The Key Facts Illustration also details all fees associated with the mortgage including any that your advisor will get if you decide to proceed. Again all this is provided without obligation and your advisor will go through the document with you and answer any further questions you might have. It could be that something in this document is unsuitable for a reason that has not come up previously. In this case, the advisor will go back to step 2.

4.      The application

The majority of clients enquiring never get to this stage, or at least not initially, but may come back in years to come. With the Key Facts Illustration there will be a blank application form for that product and from that lender. Whether this is filled in and sent back to us is completely up to the client. Advisors will always be there to provide more information as needed, and answer any more questions, but in general this is a personal decision and our clients are left alone to ponder it.

5.      The valuation

On receipt of an application a chartered surveyor will be instructed to value the property. This is a valuation for mortgage purposes and will usually happen soon after an application is received. The surveyor will visit your home for about an hour, and then go back and write a report to the lender about how much they think the house is worth. In the majority of cases this comes back as what the customer has estimated. In the UK people generally have a good idea about what their houses are worth.

6.      The offer document

After the lender has received the valuation report, an offer document is sent out. This will look almost exactly like the Key Facts Illustration, and will have the same information. This is just a confirmation on what the mortgage will look like now that the house valuation has been confirmed.

7.      The legals

As it is a mortgage, or to give it the official name, a legal charge on a property, you will need a solicitor to advise you before you sign any documents. They will also witness your signature and carry on the legal work before completion.

8.      Completion

The mortgage has been signed, sealed and delivered and the money is now in your bank account. The lender will now send you yearly updates on the mortgage and how much is owing. The only thing to do now is decide how to spend the money. Although hopefully this decision was made long before you even enquired about equity release.

As you can see the overall process is almost exactly the same as when you entered into your first mortgage to buy a home. Throughout the process the Equity Release Information Centre will offer advice and information when asked for, and not before. If you want information on equity release, or would simply like our free brochure, please call us on 0800 077 6885. Alternatively you can order our brochure online, or see how much you could release at www.AskEric.TV

These are lifetime mortgages or home reversion plans. To understand the full features and risks, please ask for a personalised illustration.