Despite being labelled high risk, many people are signing up to a form of equity release mortgage called a home reversion scheme . The schemes, despite being unregulated by the FSA (Financial services authority), have leapt in popularity at the start of 2006.
The schemes aim to purchase a percentage of a person’s home in return for a lump sum of money, and have been called ‘higher risk’ products by the FSA. The mechanism to regulate home reversion schemes are underway, but are not ready yet. People against home reversion schemes highlight the fact that consumers choosing them have no way of claiming compensation, unlike those who choose regular lifetime mortgages or equity release mortgages .
The telling figures were released by a group of companies known as SHIP (Safe Home Income Plans) that collectively represent the equity release market. SHIP is steadily taking the equity release industry forward, and its members include Norwich Union, Northern Rock, Portman Building Society and Standard Life .
The surge in home reversion schemes comes after hefty criticism from Which!, the consumer watchdog. They claimed that many consumers were unaware of the interest contained in their payouts. Equity release companies were also lambasted as advertising their products as ways to pay for holidays or new cars .
Equity release mortgages on the rise
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Equity release mortgages on the rise
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