The Concept Behind Equity Release

The concept behind equity release is simple - an amount is borrowed against a home and the amount borrowed plus interest is not usually repaid until the property is sold. No interim repayments are required.

As with any product of this type there are risks and issues which have to be considered. As advisers you should be aware of all the factors which influence which product features a client should ultimately use.

The following issues to consider are:

1. The financial stability of the lender
2. Interest rate risk
3. Impact of fees and valuation costs
4. How the loan will be repaid
5. Views of all potential beneficiaries
6. Centrelink assessment issues, such as gifting
7. Income tax implications

This document seeks to address all these issues whilst also helping you to understand the Home Equity Access product.

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