Shared language, shared understanding
The glossary, instantly
30 terms every adviser and client should share a definition of. General education only — not regulated advice.
AER (Annual Equivalent Rate)
The interest rate shown on an annualised basis, allowing fair comparison between different compounding conventions.
Compound Roll-up
Interest added to the loan balance each month, with future interest charged on the growing total rather than on the original advance.
Confirmation
The Scottish process of administering a deceased person's estate, which replaces probate in England & Wales.
Downsizing Protection
A feature allowing the loan to be repaid without early repayment charges on a sale and move to a smaller property, usually after a qualifying period.
Drawdown Facility
A pre-agreed reserve of funds that can be released in stages after an initial advance, with interest charged only on amounts actually drawn.
Early Repayment Charge (ERC)
A charge for repaying all or part of the loan during a defined period, calculated on a fixed tapering scale or by reference to gilt yields.
Enhanced (Medical) Underwriting
Terms based on disclosed health and lifestyle factors, which may increase the maximum available or improve the rate offered.
Enhanced / Impaired Life Terms
Terms offered where disclosed health or lifestyle factors shorten the expected duration of the plan — typically allowing a higher maximum release, a better rate, or both. Offered on the provider's health questionnaire and confirmed only on underwriting.
Equity Release Council (ERC)
The industry body whose member standards include the no-negative-equity guarantee, security of tenure for life and independent legal advice.
Gilt-linked ERC
An early repayment charge calculated from the movement in a reference gilt yield between drawdown and repayment, usually capped and time-limited.
Home Reversion Plan
Selling all or part of the home to a provider at below market value, in exchange for a lump sum and a rent-free lifetime lease.
Independent Legal Advice (ILA)
Advice from the client's own solicitor, acting for the client alone, confirming they understand the transaction and consent to it.
Inheritance Protection
An option reserving a percentage of the property's eventual sale value for beneficiaries, which reduces the maximum amount available to release.
Interest Servicing
Paying some or all of the monthly interest so the balance grows more slowly, or not at all, subject to the product's terms.
KFI (Key Facts Illustration)
The standardised document an adviser must provide, setting out the costs, rates, features and risks of a recommended plan in prescribed form.
Lifetime Mortgage
A loan secured against the home, repaid from its sale when the last borrower dies or moves into long-term care. The borrower retains full ownership throughout.
LTV (Loan-to-Value)
The percentage of a property's value that can be borrowed. In equity release it rises with age, from roughly 20% at 55 to over 50% in the late eighties.
Means-Tested Benefit
A benefit awarded on the basis of income and capital rather than contributions — for example Pension Credit, Universal Credit, Council Tax Support and some care funding. Entitlement is assessed against capital thresholds, so released money that is retained can reduce or remove it.
Means-Tested Benefit Hit
The reduction in entitlement caused by retaining released capital. Above the lower capital threshold a tariff income is assumed, and at the upper threshold entitlement normally ceases altogether. Mitigated by releasing only what is needed, using staged drawdown, and completing a benefits check before any recommendation.
MER (Monthly Equivalent Rate)
The interest rate expression used for lifetime mortgages, showing the rate compounded monthly. Always compare like-for-like with AER.
No Negative Equity Guarantee
The Equity Release Council safeguard ensuring the client or their estate can never owe more than the home's eventual sale proceeds.
Occupier Waiver
A document signed by an adult occupier who is not a borrower, acknowledging they have no right to remain once the plan is repaid.
PET (Potentially Exempt Transfer)
A lifetime gift that falls outside the estate for inheritance tax provided the donor survives seven years after making it.
Portability
The ability to move the plan to another property acceptable to the provider, subject to its criteria at the time of the move.
RIO Mortgage
Retirement Interest-Only mortgage: a later-life loan where monthly interest is paid and the capital is repaid on death, sale or a move into care.
Standard Security
The Scottish equivalent of a legal charge, registered in the Land Register of Scotland rather than at HM Land Registry.
Suitability Report
The written report in which the adviser records the client's objective, the research undertaken, the alternatives considered and discounted, the costs and risks explained, and the reasons the recommended plan is suitable. It is the primary evidence of advice on the file.
Tenure for Life
The Equity Release Council safeguard giving the client the right to remain living in their home for life, or until a permanent move into long-term care, provided the plan's conditions are met.
Voluntary Partial Repayment
Repayments permitted within a stated annual allowance without an early repayment charge, commonly 10–12% of the advance or balance.
Voluntary Repayment Allowance
The amount a client may repay each year without incurring an early repayment charge, commonly 10–12%. Check whether it is calculated on the initial advance or the outstanding balance, the minimum payment size, the number of payments permitted each year, and whether unused allowance carries forward.
Risks and their counterweights
Balanced education means naming the risk and its mitigation in the same breath.
Open the full risks and counterweights area| Risk | Why it matters | Standard safeguards |
|---|---|---|
| Compound interest erosion | Roll-up interest roughly doubles a balance every 12–13 years at typical fixed rates, reducing the equity left in the home. | Drawdown facilities, voluntary interest servicing, and 10–12% annual repayment allowances. |
| Means-tested benefit impact | Released capital retained above £6,000–£10,000 can reduce Pension Credit, Council Tax Support and some care funding. | Staged drawdown, a benefits check before recommendation, and releasing only what is needed. |
| Reduced inheritance | Less property value passes to beneficiaries on death or entry into long-term care. | Inheritance protection options, partial servicing, and early family involvement in advice. |
| Early repayment charges | Repaying within a fixed or gilt-linked charge period can be expensive and is not always foreseeable. | Downsizing protection clauses and clear KFI disclosure of the charge structure and its expiry. |
| Property criteria and future moves | Construction type, tenure, land, occupancy and condition can restrict availability now and on a future move. | Criteria checked against provider documentation before advice, plus portability terms confirmed in writing. |
| Capacity and vulnerability | Later-life clients may experience cognitive decline, bereavement or family pressure during the advice process. | Vulnerability assessment, a second meeting, meeting the client alone, and independent legal advice. |
| Jurisdictional difference | Product availability, property law, legal process and regulation differ across the UK and Crown Dependencies. | Jurisdiction recorded on every case, research scoped to verified local data, and locally qualified lawyers instructed. |
General education for professional use. Not regulated advice, and not a substitute for the provider's own documentation or local legal advice.