Equity Release

Question 1

What is the most common form of lifetime mortgage?

A. Home income plan
B. Interest roll-up
C. Interest-only

Answer 1

Interest roll-up

Question 2

If funds raised through equity release are sued to buy a purchased life annuity, what is the tax treatment of income received from the annuity?

A. It is tax-free
B. It pays gross but is fully taxable
C. Part of the income is taxable, part is tax-free

Answer 2

Part of the income is taxable, part is tax free

Question 3

Where a home reversion plan contains a specified period of time under which it will end, this must be for a minimum of:

A. 10 years
B. 15 years
C. 20 years

Answer 3

20 years

Question 4

Mark the following statements regarding equity release schemes as True or False.

A. As they are not mortgages, home reversion plans are not regulated by the FCA
B. With an interest roll-up mortgage, older borrowers will usually be able to borrow a higher percentage than younger borrowers
C. Interest in a home reversion plan is usually rolled-up
D. Where a member of the Equity Release Council has granted a lifetime mortgage, there must be a guarantee of no negative equity

Answer 4

False
True
False
True

Question 5

Lifetime mortgages are designated by the FCA as:

A. Higher risk
B. Medium risk
C. Lower risk

Answer 5

Higher risk

Question 6

What is the tax treatment of regular payments received by a client under a drawdown equity release scheme?

A. They are tax-free
B. They are partly taxed
C. They are fully taxable

Answer 6

They are tax-free