Many people may be considering equity release schemes to help them enjoy their retirement. But what options should they choose? The two main types of providers for this type of scheme are independent advisors or direct providers.
This article will examine both and give the pros and cons to decide which option is best for you, or if you would like to take advantage of both.
What Are Independent Advisers?
Independent advisers are usually financial advisers1 or mortgage brokers who provide advice for all types of equity release schemes. They may also specialize in this type. They will help you decide whether equity release is right for you and what scheme would be most suitable based on your needs.
Advisers offer impartial2 free advice and will also help you decide which company would be best for your requirements, as they have no ties to any providers. However, not all advisers are completely impartial, and this is why you must do your research into who you choose to speak with for advice.
Some companies offer incentives or commissions if an adviser recommends their product over another provider’s offering, so make sure you know which schemes they represent before speaking with them.
What Are Direct Providers?
A direct provider is a company themselves (they will often use independent mortgage brokers). Still, they also sell products directly through their channels too usually online or via telephone call centers.
A direct provider offers different types of equity release schemes, most commonly lifetime mortgages, where interest rates can be quite competitive compared to other lenders’ equivalent offerings.
You may be able to access your money instantly, as all payments are made directly from the equity in your property. However, direct providers often do not offer impartial advice, and therefore you will need to research the product yourself before signing up.
This means that if something goes wrong or you wish to switch providers, it’s likely you may have trouble doing so because of this lack of independent advice support. You also miss out on any benefits of using an adviser, such as potentially lower interest rates, free valuations, etc.
The Key Differences and Similarities
There are many differences between independent advisers and direct providers in terms of the equity release schemes they offer and their strengths and weaknesses.
The main difference is that you’ll have to research the product with a direct provider because there won’t be an adviser on hand if something goes wrong or you wish to switch companies.
If you already know what type of scheme will suit your needs best, then using a direct provider may save some time when it comes to comparing different lenders’ products too. But most people would prefer advice from impartial professionals who can help them choose the right option based on their specific requirements.
Using an independent adviser means you’ll receive impartial advice and support, but it may take more time. You will be able to benefit from lower interest rates as well as free valuations3, etc. if your chosen provider is offering incentives or commissions for selling their product.
However, many people would prefer the ease of knowing they can switch providers should something go wrong without too much trouble, such as losing access to funds because no one else offers a similar scheme at that moment in time.
Should Equity Release Intermediaries Be Your Only Option?
No, equity release should not be your only option. It’s suitable for some people, but not all you will need to assess whether or not it’s right for you and what options would suit your needs best before committing any money/time at all. You can find out more about the basics of equity release here.
Whether you decide to use an independent adviser or direct provider when choosing a scheme depends on how much time and effort you’re willing to put in yourself when researching products and if impartial advice support in case something goes wrong with the company in question sounds beneficial too.
Many other ways may provide similar opportunities that have their pros and cons attached, so consider speaking to different companies first instead of just using equity release as your only option.
However, you do need to assess your situation to be sure of the most appropriate way forward.
Criteria to Be an Equity Release Adviser
To be a good equity release adviser, you have to have some experience in the field. You also need to understand how different schemes work and their benefits to explain them fully when required. People use advisors for this reason alone, after all.
But it’s very important not only because of knowledge requirements but impartiality too as many people may rely on an advisor’s advice and support should something go wrong with the provider they’ve chosen.
You can find out more about being an independent equity release adviser, including training options here before making any decisions on becoming one yourself, though.
If finding clients sounds hard, then selling your financial products might be easier, which would allow you to make money from commissions4 instead of if successful or switch between different companies yourself.
Many equity release schemes are available to people over the age of 55, but some lenders5 will allow you access to your funds earlier than that.
It’s worth checking with different providers to see what they offer so that you can compare benefits and drawbacks accordingly.
You must also be sure about how much money you want/need to pick the right scheme for your needs and stick within any limits set by providers, which may vary depending on criteria such as customer location or profession.
How Do You Decide Which Lender to Use?
It would help decide which lender to use based on what criteria they require you to meet and how much interest rates are. Suppose there are any free valuations, etc., with the product itself.
In that case, providers offer incentives for selling their schemes, so you must compare different options before making up your mind about using equity release, though.
You can find out more details here regarding independent equity release advisers and the schemes they offer. You will be able to switch between providers should you need to do so if using an independent equity release adviser.
However, it’s important not only because of knowledge requirements but impartiality too, as many people may rely on an advisor’s advice and support should something go wrong with their chosen company.
This is why being a good advisor requires experience and understanding of different products and how they work. You can find out more about becoming one here before deciding whether or not it’s right for you, though.
Equity release schemes for older people can be a great way to make some money and still live comfortably. These plans involve selling off the equity in your property, which then generates income that you can use as needed, either monthly or lump sum payments.
What’s more, it may also provide an opportunity for those who are retired with limited financial resources to stay home longer than they might otherwise have been able to do on their own.
The decision of whether you should seek out independent advisors or direct providers depends largely on what kind of equity release scheme best fits your needs and circumstances.