Arrangement Fees from Advisors for Equity Release - Do I need one?

Leodogger

dimbo61 said:

Right said Fred.
The next great mis selling scandal ?

Why would it be, it is regulated by the Finance Industry and is controlled under the Equity Release Council?

dunstonh

 Can it be cheaper once you have got the advice going elsewhere for your equity release plan who offer free valuations etc.,

Yes it can be cheaper.  A lot cheaper.  it can probably be more expensive too.

Right said Fred.
The next great mis selling scandal ?

A claim often made by children who don't like the fact their parents spent their own money whilst alive and left less to inherit.   However, there is no indication that current ER products or processes have any issues.

Leodogger

ACG said:

You need to weigh up the costs in total. 

If the fees are £3,000 but it saves you £10k, it might be a lot but it saves you £7k. 

By the way, I am getting conflicting advice about obtaining Equity Release if you have a Tenants in Common Trust Will on the property.   Age Partnership told me over the phone that they cannot offer funds to people with these Trust Wills in place, then I rang More2Life and they told me they DO offer ER to property owners with a Tenants in Common Trust Will as long as BOTH owners are still alive but not if one has passed away!    Then I read here that ER providers DO offer ER with these Tenants in Common Trust Wills:

https://www.moneyrelease.co.uk/Equity-Release-For-Tenants-In-Common/

Which is true?

K_S

Leodogger said:

ACG said:

You need to weigh up the costs in total. 

If the fees are £3,000 but it saves you £10k, it might be a lot but it saves you £7k. 

By the way, I am getting conflicting advice about obtaining Equity Release if you have a Tenants in Common Trust Will on the property.   Age Partnership told me over the phone that they cannot offer funds to people with these Trust Wills in place, then I rang More2Life and they told me they DO offer ER to property owners with a Tenants in Common Trust Will as long as BOTH owners are still alive but not if one has passed away!    Then I read here that ER providers DO offer ER with these Tenants in Common Trust Wills:

https://www.moneyrelease.co.uk/Equity-Release-For-Tenants-In-Common/

Which is true?

@leodogger They could both be true. It might be that Age Partnership can't recommend any products for people with Trust Wills while More2Life can. That could be due to the panel of lenders they can access, or their compliance requirements, insurance clauses, etc.

I don't do equity release (I researched it in the past but it was simply too much work and onerous regulatory requirements for not enough money) and know very little about it, but a similar example in the residential mortgage industry is - I know of advisors that do not / cannot advise on certain requirements such as debt consolidation, interest-only residential lending for clients below a certain income, etc.

It doesn't mean the products aren't out there and available through other brokers, it's just that that specific firm can't arrange them.

ACG

As KS says. 

I dont do ER so I do not know the answer. 

Leodogger

K_S said:

Leodogger said:

ACG said:

You need to weigh up the costs in total. 

If the fees are £3,000 but it saves you £10k, it might be a lot but it saves you £7k. 

By the way, I am getting conflicting advice about obtaining Equity Release if you have a Tenants in Common Trust Will on the property.   Age Partnership told me over the phone that they cannot offer funds to people with these Trust Wills in place, then I rang More2Life and they told me they DO offer ER to property owners with a Tenants in Common Trust Will as long as BOTH owners are still alive but not if one has passed away!    Then I read here that ER providers DO offer ER with these Tenants in Common Trust Wills:

https://www.moneyrelease.co.uk/Equity-Release-For-Tenants-In-Common/

Which is true?

@leodogger They could both be true. It might be that Age Partnership can't recommend any products for people with Trust Wills while More2Life can. That could be due to the panel of lenders they can access, or their compliance requirements, insurance clauses, etc.

I don't do equity release (I researched it in the past but it was simply too much work and onerous regulatory requirements for not enough money) and know very little about it, but a similar example in the residential mortgage industry is - I know of advisors that do not / cannot advise on certain requirements such as debt consolidation, interest-only residential lending for clients below a certain income, etc.

It doesn't mean the products aren't out there and available through other brokers, it's just that that specific firm can't arrange them.

Point taken !

ACG

dimbo61 said:

Right said Fred.
The next great mis selling scandal ?

It should'nt be. 
Now a days, I am pretty sure the customers have to take legal advice. 

I do not doubt historically as a product there were people who took advantage and probably still are people who do. But the FCA has done a lot of work on vulnerable customers, the industry knows it is dealing not only with potentially vulnerable customers but also potentially unhappy "children" of the customers who no longer have an inheritance. 

I would imagine that the compliance folders are quite thorough. 

Linton

ACG said:

dimbo61 said:

Right said Fred.
The next great mis selling scandal ?

It should'nt be. 
Now a days, I am pretty sure the customers have to take legal advice. 

I do not doubt historically as a product there were people who took advantage and probably still are people who do. But the FCA has done a lot of work on vulnerable customers, the industry knows it is dealing not only with potentially vulnerable customers but also potentially unhappy "children" of the customers who no longer have an inheritance. 

I would imagine that the compliance folders are quite thorough. 

Yes, anyone taking out ER must be offered independent advice from someone quitably qualified and regulated.  If you dont have your own advisor the ER company will provide and charge for one.

Leodogger

Update -  Now had a meeting with Age Partnership and our worst fears have been realised.    We had a Property Protection Trust on our Wills and have been told that until we get that Trust removed, we cannot get an offer of Equity Release on the property.  Which means making a new will (although the Tenants in Common registered at the Land Registry can remain).    So altogether with making a new will, it is going to cost us an eye watering £3124 (£1795 for Age Partnership for the Arrangement Fee!).  An additional £1000 for the solictor and £329 for the new will!!).   Of course it also means we have to sacrifice our protection from care home fees by giving up the Trust Will !

MWT

Leodogger said:

That sounds a hell of a lot of money for recommending ER plans!   Can it be cheaper once you have got the advice going elsewhere for your equity release plan who offer free valuations etc.,

You are going to have to get the advice from the same party as you get the plan through so their is a continuity between the advice and taking the product, but you can get it without paying a fee for the advice in a lot of cases...

Given your comments about the will issue I'd suggest starting with advice from 'StepChange Financial Solutions' as they do not charge for advice and can access a wide range of lenders, which can include products with features like free valuations, no product fee etc. but I would seriously suggest you look at the other features of the product like the way ERC is handled, down-sizing protection etc. and avoiding a few hundred in fees up front is rather less important than getting the right product for the future.

I do understand the desire to avoid the advice fee as it can easily get into several thousand, so unless you have a particularly complex case that StepChange cannot help you with, their free advice may be the way to go...