An illustration is the personalised document you are given before you apply. Its structure is set by the FCA rather than by the firm, which means every illustration carries the same fourteen headings in the same order. This sets out that list, explains the projection table without overstating it, and separates an illustration from an offer.
It is not a sales brochure. The FCA sets out what it must contain, in what order, under numbered headings, and knowing that list is most of knowing what to check.
Equity release may involve a lifetime mortgage, secured against your property, or a home reversion plan. It will reduce the value of your estate and impact funding long-term care.
An illustration is the personalised document an adviser gives you before you apply. Its shape is not left to the firm: MCOB 9.4.2R requires it to contain the material set out in the relevant annex to that chapter, in the order given, and using the numbered section headings.
That is useful to you in a way it is not usually explained. It means every illustration you are shown, from any firm, carries the same fourteen headings in the same order. You can find the part you want without reading the whole thing, and you can tell immediately when you are being shown something else.
An offer. An illustration sets out what a plan would look like on the figures known that day. The lender has not agreed to anything at that point, the property has not been valued, and the figures can change.
What the fees actually are →MCOB 9.4.17R requires the illustration to say how long it is valid for. Find that date. Rates and criteria move, and an illustration from three months ago is a description of a market that has moved on.
What rates are doing →MCOB 9.4.65R requires the illustration to itemise all the fees included in the calculation of the APR. A single "costs" figure with nothing under it is not what the rule asks for.
How the charges work →MCOB 9.4.51R prescribes a year by year table: the balance at the start of the year, the interest charged, and what you owe at the end of it. It shows how the arithmetic behaves, not what will happen.
How rolled-up interest works →One of the fourteen is "Risks - important things you must consider". It is a required section, not a footnote a firm chose to add, and it is the one worth reading twice.
The risks, with the numbers →This is the structure MCOB 9.4 prescribes for a lifetime mortgage illustration. If you are holding a document that does not follow it, you are holding something else, and it is worth asking what.
The table under "What you will owe and when" is the part most people look at first and the part most often misunderstood. It runs on assumptions: a rate that does not change, no payments made, and a property value that moves at an assumed rate. Change any one of those and the last row changes.
What it is good for is showing the shape of compounding, which is not intuitive. What it cannot do is tell you what you will owe, because nobody knows how long a plan will run.
An illustration describes a plan on the information known that day. An offer is the lender agreeing to lend on stated terms, and it comes later, after a valuation and an application. Between the two, several things can move: the valuation may differ from the estimate, the criteria may be applied to your particular property, and the rate available may have changed.
That is not a reason to distrust the illustration. It is a reason to treat it as the document that lets you compare and ask questions, rather than the document that settles anything.
What your own illustration means for you. We have not seen it, we do not know your circumstances, and reading a personal document back to somebody is advice, which we are not authorised to give.
Whether the plan in it is a good one. That is precisely what the advice process exists to establish, and the adviser who produced the illustration has to explain why it suits you.
What your illustration says about you. Every illustration is personal to the person it was produced for, and this page is about the structure of the document rather than the contents of yours. We are not advisers, we cannot tell you whether a plan suits you, and we would be breaking the rules if we tried.
Equity release may involve a lifetime mortgage, secured against your property, or a home reversion plan. It will reduce the value of your estate and impact funding long-term care.
None of this costs anything and all of it makes the conversation afterwards shorter.
Questions the document itself should prompt.
How long is this illustration valid for?
It is a required part of the document. Knowing the date tells you whether you are comparing current figures or historical ones.
Which fees in the itemised list do I owe if I do not proceed?
Some are payable on application and some only on completion. The list tells you the amounts; only the adviser can tell you the timing.
What rate does the projection assume, and is it fixed for the life of the plan?
The whole table depends on it. A fixed rate makes the projection arithmetic; a variable one makes it an assumption.
Does the projection assume I make no payments?
On a product that allows payments, the table showing what happens if you make none is only one of the possible outcomes.
What is under "Additional features", and does any of it cost extra?
It is one of the fourteen required headings and the one people skip. Downsizing protection and voluntary payments can live there.
What would change between this and an offer?
The honest answer names the valuation and the underwriting. It is the question that stops an illustration being mistaken for a decision.
Can I have this in writing to take away and read?
Yes is the only good answer. Nobody should be reading a document like this for the first time across a table with somebody waiting.
Short answers to the things that come up most. None of it is advice, and every figure on this page carries its source.
No. An illustration describes what a plan would look like on the information known that day. An offer is the lender agreeing to lend on stated terms, and it comes later, after a valuation and an application. Things can move between the two.
Under the heading "What fees must you pay?", which is one of the fourteen the FCA prescribes. MCOB 9.4.65R requires the illustration to itemise all the fees included in the calculation of the APR, so a single combined figure with nothing beneath it is not what the rule asks for.
Because the table shows interest charged on interest, year after year, on the assumption that no payments are made. MCOB 9.4.51R prescribes the columns: the balance at the start of the year, the interest charged, and what you owe at the end of it. It shows how compounding behaves rather than predicting what will happen.
The document has to say. MCOB 9.4.17R requires an illustration to include details of how long it is valid for, so the date is in there. Rates and criteria change, which is why the limit exists.
Yes. An adviser can produce one for a different amount, a different product or a different structure, and comparing two side by side usually shows that less differs between them than it first appears.
Equity release may involve a lifetime mortgage, secured against your property, or a home reversion plan. It will reduce the value of your estate and impact funding long-term care.
One qualified equity release adviser. They will go through your figures and tell you if there is a better answer. It costs nothing and commits you to nothing.
Google Analytics, Microsoft Clarity and Vimeo. Say no and none of them loads. What each one stores, and what Microsoft use theirs for.