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Equity Release Financial Product Regulations

Josef Mercieca , Tax Partner |

07 August 2019

The Equity Release Financial Product Regulations (LN 193 of 2019) were passed as a regulation under the Financial Institution Act on the 6th of August 2019. These provide for the creation of a new type of financial instrument through the release of equity locked in one’s home.

 

It consists of  equity  release  credit  agreements  where  the creditor  grants  on  loan  a  lump  sum,  periodic  payments  or other forms of credit disbursement in return for a sum deriving from  the  future  sale  of  a  residential  immovable  property  or  a right relating to residential immovable property and will  not  seek  repayment  of  the  credit  until  the occurrence of the death of the consumer or his/her move to long-term care or any one or more other specified life events of the consumer as may be defined by the competent authority, unless the consumer breaches his contractual obligations which allows the creditor to terminate the credit agreement.

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