Taylor Vinters - Solicitors

Individuals considering signing up for equity release schemes should receive better advice, a new survey suggests, in order to ensure they do not face debt problems or legal issues at a later date.

Research conducted by the consumer campaign group Which? recently found that a number of equity release advisers may be offering inadequate guidance to homeowners considering such mortgage products.

Posing as customers, researchers visited 40 financial advisers and discovered that only a third of them met all standards set by Which?.

Some advisers reportedly failed to mention how quickly debt can grow over the course of an equity release scheme, while others did not discuss the effects of compound interest.

Martyn Hocking, editor at Which? magazine, is now calling for a tightening up of the regulations governing the equity release advice process.

He commented: "If you've been hit by plunging pensions, it might be tempting to release some much-needed money using your home.

"However, opting for an equity release plan is a big decision and it's not one that should be taken lightly."

The equity release body Safe Home Income Plans has responded to the Which? findings by suggesting continuous improvement is required to ensure confidence remains within the sector.

Clare Martin, residential property lawyer at Taylor Vinters, commented: "Funds received from an equity release scheme are usually released at a premium interest rate for the borrower as the risk is greater than an ordinary lending scheme and very often borrowers do not appreciate how expensive the money is that they are requesting.

"The decision to release equity should also be discussed with family members as this scheme can have a detrimental effect on the estate of the borrower in time to come.

"In some instances family members may rather raise funds from another source to assist the borrower rather than make use of such an expensive borrowing system.

"The borrower should consider all possible avenues before opting for the equity release route, and seek expert and independent advice prior to embarking on any equity release scheme."