Equity release charges

michael079

dunstonh said:

Upto the drawdown amount, no adviser is required.  However, if the drawdown amount has been used up and a further amount is needed, then the adviser would make a charge.  They have to do the bulk of the work and that charge is to pay them for their work.

I spoke to the assigned advisor today, and that price is now £1900. In 2016 it was £500. Quadrupled in 7 years 🤯 

MWT

Which lender is this for?

michael079

MWT said:

Which lender is this for?

The lender is Aviva but the advisor is through Key, who are the ones who quoted this today. 

MWT

dunstonh said:

They have to do the bulk of the work and that charge is to pay them for their work.

I believe it is also correct to note that in addition to their fee they will also receive commission from the lender?

Not a lot of commission on a small release like this though I imagine...

dunstonh

MWT said:

dunstonh said:

They have to do the bulk of the work and that charge is to pay them for their work.

I believe it is also correct to note that in addition to their fee they will also receive commission from the lender?

Not a lot of commission on a small release like this though I imagine...

I don't know.  My equity release adviser doesn't take a commission.  He is fee only.  I don't personally do ER.   So, I cannot say whether nil commission is the norm or a choice.  I have a suspicion that if commission does exist, it comes out of the fee (but I will let one of the other guys that does ER and post here confirm)

MWT

dunstonh said:

I have a suspicion that if commission does exist, it comes out of the fee (but I will let one of the other guys that does ER and post here confirm)

I can only add that of the 4 potential ER advisors I considered, 3 charged a fee (£800-£2,500) and all of those disclosed that they would also receive commission from the lender.

Wouldn't want to derail this thread, but it would be interesting to know if that is typical or not.

michael079

MWT said:

dunstonh said:

I have a suspicion that if commission does exist, it comes out of the fee (but I will let one of the other guys that does ER and post here confirm)

I can only add that of the 4 potential ER advisors I considered, 3 charged a fee (£800-£2,500) and all of those disclosed that they would also receive commission from the lender.

Wouldn't want to derail this thread, but it would be interesting to know if that is typical or not.

How does we find the ones on the lower end of the scale? £800 for example? Is there a quick way to locate them or do you need to approach one by one and wait for the call and go through all the terms etc before they tell you

MWT

michael079 said:

MWT said:

dunstonh said:

I have a suspicion that if commission does exist, it comes out of the fee (but I will let one of the other guys that does ER and post here confirm)

I can only add that of the 4 potential ER advisors I considered, 3 charged a fee (£800-£2,500) and all of those disclosed that they would also receive commission from the lender.

Wouldn't want to derail this thread, but it would be interesting to know if that is typical or not.

How does we find the ones on the lower end of the scale? £800 for example? Is there a quick way to locate them or do you need to approach one by one and wait for the call and go through all the terms etc before they tell you

You have a problem to deal with,you are not looking for a new product, just a further advance, so the likelihood of the advisor being at the lower end of that scale is impacted by the much lower commission available, if indeed there is any commission at all on a further advance...

Also the Equity Release product and hence the lender is already determined, so depending upon which lender that is, you may find the fee level and willingness/ability of a particular advisor to be involved may be impacted when seeking a further advance.

It might enable others to be more helpful if you were willing to name the lender, but the only zero fee advisor I know that isn't tied to a very short list of products is StepChange Financial Solutions, but as I said earlier, I have no idea if they can help you with a further advance at all, or if they can, if they can do it with the particular lender your mother used...

The only other way you can approach this would be to replace the existing ER product with an entirely new product from a different lender (can only have one ER product in place), but unless her original product was on a higher interest rate than I would have expected, that is very unlikely to be a good idea given the current level of interest rates, the potential for ERC on the current product and your mother's current state of health. So the odds are the further release is still the best way to proceed, but again that is something you would expect the advice you will receive to consider.

michael079

MWT said:

michael079 said:

MWT said:

dunstonh said:

I have a suspicion that if commission does exist, it comes out of the fee (but I will let one of the other guys that does ER and post here confirm)

I can only add that of the 4 potential ER advisors I considered, 3 charged a fee (£800-£2,500) and all of those disclosed that they would also receive commission from the lender.

Wouldn't want to derail this thread, but it would be interesting to know if that is typical or not.

How does we find the ones on the lower end of the scale? £800 for example? Is there a quick way to locate them or do you need to approach one by one and wait for the call and go through all the terms etc before they tell you

You have a problem to deal with,you are not looking for a new product, just a further advance, so the likelihood of the advisor being at the lower end of that scale is impacted by the much lower commission available, if indeed there is any commission at all on a further advance...

Also the Equity Release product and hence the lender is already determined, so depending upon which lender that is, you may find the fee level and willingness/ability of a particular advisor to be involved may be impacted when seeking a further advance.

It might enable others to be more helpful if you were willing to name the lender, but the only zero fee advisor I know that isn't tied to a very short list of products is StepChange Financial Solutions, but as I said earlier, I have no idea if they can help you with a further advance at all, or if they can, if they can do it with the particular lender your mother used...

The only other way you can approach this would be to replace the existing ER product with an entirely new product from a different lender (can only have one ER product in place), but unless her original product was on a higher interest rate than I would have expected, that is very unlikely to be a good idea given the current level of interest rates, the potential for ERC on the current product and your mother's current state of health. So the odds are the further release is still the best way to proceed, but again that is something you would expect the advice you will receive to consider.

OK thanks so much, very helpful to understand more about the process. 

It's aviva the lender and key was the advisor 

MWT

michael079 said:

OK thanks so much, very helpful to understand more about the process. 

It's aviva the lender and key was the advisor 

Key typically charge £899 on new ER products so it looks like they have already increased the fee, because this is a further advance.

Has anyone mentioned any legal costs?

I would certainly check with a couple of other advisors though as there should be plenty of independents able to deal with Aviva.