You might have found an advisor through a recommendation. But just how good is this advisor that is sitting in front of you? I have worked in the Financial Services industry for over 20 years and there are somethings I would suggest you cover at your first meeting. I would recommend bringing these things up once the adviser has been through his or her initial introduction as they will normally give you an opportunity to ask anything that you wish.
- How do I know that the advice you will give is impartial? Are you a Tied, Multi-Tied or Whole of market adviser
- What are your qualifications, how long have you worked in the industry?
- Which company do you work for and what are their contact details?
- How are you and your company’s fees paid?
- Will you give comparisons of different companies, costs and reasons for the products being offered and the ones that you are not recommending?
- How do you go about researching the advice that you will give and the companies that you will recommend?
- Do you hold Competent Advisor Status?
OK, this is just the start as you will want to spend some time figuring out if you like this person and if they come across as trustworthy. The final question, number 7, is important and not one many consumers know about. Basically, it means that the advisor has been through all of the training required by their employer to be granted the ability to advise people in their own right.
Please call me on 0845 029 1962 if you have any queries or visit my website at www.releasequity.com
posted by Michael Knight at 2:13 pm
1. Involve your Family
Talk through all the issues before you taking out Equity Release. Using the equity in your home affects the amount you will be able to leave as an inheritance and it is best to let everyone know well in advance.
2. Take your Time
Don’t feel that you have to rush into it. Many people who end up opting for equity release take a long time to mull over the decision. A good adviser should put you at your ease, exercise patience and not put any pressure on you.
3. Expect a Valuation
Usually, your lender will arrange for an independent valuer to assess what your home is worth - the valuation figure will not necessarily correspond with an estate agent’s estimate, which may be higher. Once your home is valued, your lender can establish the maximum loan available to you.
4. Gather the Right Documents
You will need to provide birth and marriage certificates and evidence of who you are when you apply. You’ll also need the details of your home buildings insurance.
Please call me on 0845 029 1962 if you have any queries or visit my website at www.releasequity.com
posted by Michael Knight at 11:33 am
The Financial Services Authority is the consumer’s champion in Financial Services. Do you really know how they operate, though?
They really do have a great deal of power over Financial Services companies. They can close them down, suspend, fine them, and make them jump through all sorts of hoops. The processes and endless paperwork that companies produce are largely there because the FSA is trying to protect you.
They are certainly not trying to look after the interests of the companies providing advice. You, the consumer, come first. Whilst this may make life uncomfortable those who give advice, you can rest assured that your well being is at the forefront of the FSA’s intentions.
As an adviser who is registered and regulated by the FSA, you can be assured you wil receive the highest level of protection possible. Please call me on 0845 029 1962 if you have any queries or visit www.releasequity.com for more information.
posted by Michael Knight at 9:55 am
All members of SHIP are regulated by the Financial Services Authority who have only the Consumers’ interest in mind. The FSA complaints procedure exists if you are unhappy about anything and it includes strict deadlines for action, such as a response within 5 working days upon receipt of a complaint.
You must go through the plan provider’s own complaints procedure first but as these companies are regulated by the FSA I can assure you that complaints will be taken very seriously and I would be amazed if there was anything other than a very prompt response and a swift follow up to any letter of complaint from you.
In the event that you are unhappy with the outcome from the internal complaints procedure then you have the right to go to the Financial Services Ombudsman for a ruling. Needless to say that top of your checklist should be that anyone you deal with should be a member of SHIP.
Please call me on 0845 029 1962 if you have any queries or visit www.releasequity.com for more information about my services.
posted by Michael Knight at 9:10 am
There is a great deal depending on the Equity Release Adviser that you choose to be advised by so it’s worthwhile going into some detail. You need an adviser who is regulated by the Financial Services Authority. You should also choose an adviser who is well experienced and holds the right qualifications.
Questions to ask a prospective adviser include:
- Will they tell you about their charges and write them down clearly for you?
- Are they authorised by the FSA?
- Are they whole of market, multi-tied or tied? Whole of market have no limit on the number of providers to choose from, multi-tied from a handfull and tied from just one.
- How will they paid for for the advice they offer? This can be commission, fee-based or a combination of both.
- How do they carry out their research?
- How will they communicate with you during and after the transaction?
- What experience do they have with Equity Release and other financial planning?
By now you should start to get a good feel for their experience and their background and whether you want to work with them to achieve your goals.
If you would like to discus any aspects of this article, call me on 0845 029 1962 or have a look at my website www.releasequity.com
posted by Michael Knight at 9:08 am
You are researching all about Equity Release and Home Income Plans and probably want to know what safeguards are there to protect your interests. You have probably come across Safe Home Income Plans,also known as SHIP, but who are they and what do they do?
Well, SHIP is a company that was set up in 1991 by the main providers of home income plans and equity release plans. The idea is that SHIP provides protection to planholders and it does this by offering certain standards which must be adopted by product providers if they are to be included in SHIP.
The companies must offer a fair and easy to understand presentation of their products which must also fully explain their plans. The member firms must conduct business in adherence to the SHIP Code of Conduct.
Briefly this means:
- Literature must clearly set out costs, benefits and obligations as well as limitations and any variables.
- Presentations must be clear, simple and complete.
- Legal work for the customer must be carried out by a solicitor of the client’s own choosing. The Lawyer must issue a signed certificate saying that the plan has been explained to the client.
- A Certificate will be issued clearly giving the main cost to the home owner’s assets.
- A plan can only use the SHIP logo if the provider gives a guarantee that the loan will never exceed the value of the house. This is known as a “no negative equity guarantee.”
The members of SHIP are:
- Mortgage Express
- Bradford & Bingley
- Bridgewater Equity Release
- Bristol & West
- Coventry Building Society
- Dunfermline Building Society
- Hodge Lifetime
- Home & Capital
- In Retirement Services
- Just Retirement
- LV=
- more 2 life
- National Counties Building Society
- New Life
- Northern Rock
- Norwich Union Equity Release
- Partnership Home
- Prudential
- Retirement Plus
- Saffron Building Society
- Standard Life Bank
- Stonehaven
- Stroud & Swindon Building Society
More about SHIP in my next post. Please call me on 0845 029 1962 if you have any queries or visit www.releasequity.com
posted by Michael Knight at 12:30 pm
People often say that here are basically two types of financial advisor; whole of market or a tied advisor. However, this really is an oversimplification and things have actually changed recently. There are more than just two types of advisors, now, as there are also “multi-tied” advisors who have several product providers that they can recommend.
A whole of market adviser can choose from the whole of the market place when giving you advice. They are usually able to work in a wider variety of areas than a tied advisor and can select products from any supplier they deem suitable. Tied advisors usually work for a company, such as a bank or the product provider itself, and will recommend only products that their company sells. This may not be the most competitive one in the market place and they may even not be able to advise you about your area of need at all. For instance, a bank set up to give mainly investment advice is unlikely to be able to help you buy an annuity when your pension matures.
It becomes much more complex than this, though, because Financial Advisors are finding it harder to be a “generalist” who can help anyone with just about anything. More often, they tend to concentrate on specific areas rather than trying to be a jack of all trades. There are no less than 48 Financial Advisor Qualifications comprising of various letters, numbers and titles from a variety of Institutions and Societies.
Equity Release Advisors are different again, in some respects, because they require specialist qualifications. They can be a Tied or a Whole of Market Adviser and I would suggest that you will get the greatest choice of products from the latter.
SHIP has a handy qualification guide that tells you what exams people need to be able to advise on different products. See www.ship-ltd.org.uk for a quick guide.
I will publish more information on choosing your adviser in my next post.
Please call me on 0845 029 1962 if you have any queries or visit www.releasequity.com for more information.
posted by Michael Knight at 2:17 pm
I always use checklists when making a decision or organising anything. I made a great big spread sheet when arranging our holiday last year and it all went off really well. Here’s my checklist for you regarding Equity Release:
Get independent legal advice. Choose a solicitor experienced in this type of work and make sure that you find him or her easy to understand and trustworthy. Find out how much they will charge and either get a fixed quote or at least an estimate for the work involved.
Communicate with your family. Include your family, especially your children or any beneficiaries, in your decision process. Do this at an early stage so things do not come as a shock to them and they can consider all the ramifications too. It would be wise to inform anyone in your Will that their inheritance may be reduced and your executors should be informed as well, if possible.
Get advice from a trustworthy source. Check them out and try to get a recommendation if at all possible. Ask the questions about how many product providers they deal with and how much experience they have in this specialist field.
Consider carefully how to borrow. The easiest way of keeping costs down is to only use Equity Release as much as you need. Work out how much you need very carefully and go for a plan that allows you to draw more funds if needed. This can save a great deal even if you do eventually take the funds.
Don’t choose just on interest rate. There are various ways in which charges are calculated and the rate of interest is only one of them. Also consider questions such as:
- Is the plan covered by SHIP?
- Can you borrow more if needed?
- How about regulation by the FSA?
- What guarantees do you have about retaining the right to live in the property for life?
- Could you move to a new house if you wished?
Don’t forget about benefits. Your means tested benefits might be affected if your income and / or cash savings go up. Get to grips with how your benefits will be affected and make a careful equation between that and your overall financial needs.
Consider the alternatives to Equity Release. You could realise assets from elsewhere, move to a smaller, more suitable home, get home improvement grants and make sure that you are getting all of the benefits that you are entitled to.
There are more things to consider but this is a good starting point. Remember what I said about making a list - start one now and keep adding to it every time a thought crosses your mind and you should start to build a concise list of points to weigh up.
Happily I can help you with all the aspects mentioned above and as a specialist Equity Release adviser, would be delighted to help you. Please call me on 0845 029 1962 if you have any queries or visit my website at www.releasequity.com
posted by Michael Knight at 5:21 pm
According to the Halifax today, average house prices rose by 1.9% in January 2009 long with a slight rise in borrowing. This reverses the fall in December of 1.6%.
It can be dangerous to look at one month in isolation as there can be irrational fluctuations and indeed, prices in the 3 months prior to January compared to previous three months were 5.1% lower.
But, in todays doom and gloom, a bright spark of potential recovery can’t be sniffed at. That and seeing everyone enjoying the snow (if they’re not travelling of course!) means February is already more fun than January!!
If you would like to comment on this article, please call on 0845 029 1962 or mail at michael@michaelknightmortgages.com
posted by Michael Knight at 2:19 pm
This is becoming a more and more common question from many of my clients who’s mortgage deal is coming to an end in 2009 and the value of their home is dropping fast. They are concerned that they may fall into negative equity through no fault of their own. These clients may have bought 3 or 4 years ago and built a decent level of equity over time, maybe 20% to 30% or even more.
This level of equity may have dropped to only 10% but could decrease even further by the end of 2009 putting these clients into negative equity. If you do fall into negative equity, this need not be a problem unless you want or need to move.
The main concern of these clients is whether or not they will have a problem in getting another mortgage when their special deal ends. The truth is that they will not be able to move to another lender or in all liklihood get another special deal from their current lender.
Is that a bad thing?
Reassuringly, this is not a bad thing in the current market. At the end of your special deal, the default action of the lender is to place you on their Standard Variable Rate (SVR) regardless of the loan to value. In years past, this was not a good move as the SVR was uncompetitive. Nowadays though, SVR is generally competitive and has the benefit of no fees or tie-ins so you have all the benefits of low rates and absolute flexibility.
This may change in the future but for now my advice is as follows:
- reduce unsecured debts as much as possible before the end of your special deal to improve your affordability. Lenders are taking affordability more and more seriously when looking at new and existing customers.
- if you have a tracker mortgage and your payments have fallen, try to overpay to reduce the overall level of debt more quickly. This can offset some of the house price drop and improve the range of deals that may be available to you.
- even if you have a good level of equity in your home, the best deals are being offered to those customers who owe less than 60%. House prices are still dropping so it is worthwhile finding out what the current value is and if you are on the borderline, try and reduce the mortgage balance as quickly as possible.
- talk to a good whole of market mortgage broker for some down to earth advice.
To summarise, no action can be the best option with regards to new mortgage deals but you can take some control over your financial future by being prudent and reducing debt levels by as much as possible. It may be boring but if you can do this, you will be in a far stronger position when the economy turns up again - whenever that may be!
If you have any questions or queries about this article, or indeed about other articles you may find in my blog, get in touch and I’ll do my best to help you. Call me on 0845 029 1962 or email michael@michaelknightmortgages.com
posted by Michael Knight at 11:41 am