What Happens If An Equity Release Company Goes Bust?
All equity release companies offering lifetime mortgage schemes & home reversions are members of the Equity Release Council and as such are privy to the FSCS compensation scheme. Additionally, should a lender ever cease providing equity release loans their mortgage book is sold onto another lender who will then maintain its administration. The terms of the original contract must be maintained upon transfer, unless the original terms dictate they can be changed. Therefore, interest rate, drawdown facility etc will still be present moving forward.
Such instances of this occurring have been when the credit crunch hit & lenders such as Northern Rock ceased lending completely. In Northern Rocks situation their mortgage book was then taken over by Papilio UK Equity Release who now administer these legacy schemes. Therefore, in all circumstances you as the mortgagee will remain unaltered & the equity release terms & conditions of the original agreement will remain in situ. Only the contact details and the new administration company will change.
