CeRER – Free Mock

Mortgages secured against a main residence are regulated under the Mortgage Conduct of Business (MCOB) regulation. Home reversion schemes have been regulated under MCOB rules since 2007. Unsecured credit is covered under the Consumer Credit Act and the new Consumer credit sourcebook (CONC). The FCA regulate most types of lending where an individual or a small unincorporated business borrow, but the rules are split between MCOB rules for regulated mortgages and CONC for unsecured loans.

A Drawdown facility is now the most popular income option from an equity release scheme. Smaller tranches of funds are taken and spent as income, rather than all in one go. This allows for further withdrawals at a later date. This also has the additional benefit that more equity remains in the property for longer and less interest rolls up on a lifetime mortgage.

If both parties entered the scheme together then it will remain in force until the remaining party either dies, moves into long term care or moves to another main residence.

If the borrower/s enters a part reversion and down sizes, then they must pay the Home Reversion provider the same proportion of the ownership based on the money released through downsizing. 

Within FCA regulation the definition of a regulated mortgage including Equity Release schemes states that 40% of the dwelling must be occupied by the borrower/s for residential purposes.