The Financial Regulator has published a new updated version of its booklet on equity release schemes. This comes after the introduction of new legislation that requires all types of equity release schemes to be regulated by its office.
Equity release schemes are financial products that allow homeowners to release some of the value of their homes without having to move out or sell it on the open market. They are designed mainly for homeowners over the age of 60.
There are two types of such schemes - lifetime mortgages, where a person borrows money against the value of their home - and home reversion schemes, where a person agrees to sell a share of their home in return for a set cash price.
Up to February 2008, only some providers of lifetime mortgages were regulated by the Financial Regulator. But after the new legislation was passed in February, providers of home reversion schemes now also come under the regulator's remit.
The regulator's new booklet says that any firms offering home reversion schemes or lifetime mortgages must now also meet the conditions of the Statutory Consumer Protection Code.
This code requires firms to give consumers the necessary documents and full details of the total costs involved - including all interest and charges, act in the consumers' best interests, tell of the importance of getting independent legal advice and warn consumers that buying one of their products may mean they have difficulty meeting the cost of things they may need in the future.
'This will give consumers of these products the opportunity to weigh up the costs, risks and benefits of an equity release product before deciding if it is right for them', commented Consumer Director Mary O'Dea.
She also said it is very important to consumers to realise that lifetime mortgages and home reversion schemes are two very different types of equity release products, each with their own set of advantages and disadvantages.
Copies of 'Equity release - using your home to get a cash sum' are available to download from www.itsyourmoney.ie . Copies are also available by phoning the consumer help-line on 1890 77 77 77, or call into the Consumer Information Centre at College Green, Dublin 2.
