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ER1 Overview. Agenda. High-level review of syllabus Areas we will concentrate on today Practise questions Conclusion. The syllabus. Chapter 1 - Introduction to equity release (what it is, lifetime mortgages vs home reversion plans) Chapter 2 - Regulation of lifetime mortgages

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Presentation Transcript

High-level review of syllabus

Areas we will concentrate on today

Practise questions


the syllabus
The syllabus

Chapter 1 - Introduction to equity release (what it is, lifetime mortgages vs home reversion plans)

Chapter 2 - Regulation of lifetime mortgages

Chapter 3 - Regulation of home reversion plans

Chapter 4 - Product providers and customers (lenders, customer types and consideration, eligibility

the syllabus1
The syllabus

Chapter 5 - Equity release products (in detail)

Chapter 6 - The application process (obtaining advice, making an application)

Chapter 7 - Taxation and state benefits

Chapter 8 – Giving advice (role of an adviser, sales cycle, fact find, recommendations)

the syllabus2
The syllabus

Chapter 9 - Equity release administration

Chapter 10 – Complaints and Compensation

Sounds like a lot to do, but much of it is common sense

If you are already a financial adviser or mortgage adviser,

you will be familiar with some of this already

So don’t panic!!

regulation of equity release products
Regulation of equity release products

Lifetime mortgages and home reversion plans are now regulated by the FSA’s Mortgages and Home Finance: Conduct of Business Rules (MCOB)

Home reversion plans became regulated on 06/04/07

Whilst the FSA handbook sets out 11 over-arching principles applying to all regulated firms, the MCOB rules provide the ‘smallprint’ for equity release products

FSA’s definition of lifetime mortgages:

all mortgage-based, open-ended products targeted at elderly borrowers.

regulation of equity release products1
Regulation of equity release products

MCOB regulations apply to lenders, advisers, arrangers and administrators.

Two key sections of the MCOB regulations:-

Advising & Selling Standards

Initial Disclosure Document (IDD)



Product Disclosure Requirements

Pre-application – KFI

Offer stage

Start of contract

Post sale

equity release product types
Equity release product types

2 needs addressed by equity release products :

need for capital

need for income

Many of today’s lifetime mortgage products can provide a combination of both, giving customers flexibility (within limits!!)

equity release product types1
Equity release product types

Historically 4 main groups of products:-

Lifetime Mortgages (lump sum or drawdown schemes)

Home Income Plans (no longer available)

Shared Appreciation Mortgages (SAMs) (no longer available)

Home Reversion Plans

the application process
The application process

1. Application form

2. Identity verification

3. Credit check

4. Land Registry check

5. Property valuation

6. Accept/decline?

  • Lifetime Mortgage Plan
  • Legal conveyance property
  • Mortgage Ts & Cs
  • Home Reversion
  • Sale of all/part of property
  • Creation of lease
equity release administration
Equity release administration

Annual statements

MCOB requirement

Issued by lender

Tariff of charges

Usually included with annual statement


Annual evidence required

Condition of property

Rights and obligations

Other occupiers


Impact on loan

equity release administration1
Equity release administration

Additional borrowing

lifetime mortgage vs home reversion

Leaving the property

moving house

moving into care


A will is essential

Lifetime mortgage vs home reversion

and now for some test questions
And now for some test questions!!

We have picked a small sample of test questions

Answer in small groups (15 mins to answer 10 questions)

We will then discuss the answers together

Good luck!

the boring bits
The boring bits!

Feedback forms

CPD certificates

Event packs

about lv
About LV=

For financial adviser use only.

Not to be used after 31 July 2012

LV Equity Release Limited, Keynes House, Tilehouse Street, Hitchin, Herts, SG5 2DX.

LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and a trading style of the Liverpool Victoria group of Companies. LV Equity Release Limited is registered in England (No 1951289) and is authorised and regulated by the Financial Services Authority (register number 306287). Registered address: County Gates, Bournemouth, BH1 2NF. Tel: 01202 292333.

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