Equity Release

Equity release borrowers have new right to make repayments

Christina Hoghton
Written By:
Christina Hoghton

All members of the Equity Release Council must now allow borrowers to partially repay their mortgage as part of the trade association’s standards

All equity release customers taking out lifetime mortgages with firms that are part of the Equity Release Council will be guaranteed the right to make penalty free partial repayments of their loans.

It means new customers can not only reduce their borrowing, but offset the interest, without making any ongoing commitment to further repayments.

The fifth product standard is being introduced from 28 March 2022. It is added to the current four standards below, ensuring customers of Council members can rely on:

  • Fixed or capped interest rates for life
  • The right to remain in their homes for life, until they pass away or move into long-term care, with no obligation to make ongoing repayments
  • Guaranteed protection against owing more than the value of their home (the No Negative Equity Guarantee)
  • The right to move their loans to a suitable property when moving home, subject to lending criteria.

David Burrowes, chairman of the Equity Release Council, said: “Updating our standards to lock down the ability to make partial repayments on lifetime mortgages – an innovative feature that has become increasingly common in recent years – provides flexibility for consumers and ensures the sector continues to evolve to meet changing demographic needs.

“As recent years have reminded us, people’s circumstances can change and customers who find they can use earnings, savings or an inheritance to reduce their borrowing in later life will be able to do so without incurring early repayment charges.

“Introducing a fifth product standard is the latest milestone in a decades-long commitment to robust consumer safeguards.”

Kay Westgarth, head of sales at Standard Life Home Finance, added: “The introduction of a fifth standard is to be celebrated as it will allow customers to better manage their borrowing and ensure that products work for their individual circumstances. It is this type of innovation that will ensure we see another thirty years of growth and change for this vibrant market.”