Mortgage Solutions Equity Release article

Lifetime Mortgages are becoming a more and more important part of peoples financial planning; in terms of allowing them to supplement pension income, or maybe offer a living inheritance to younger family members. However, they are not for everyone and there are many different types on the market. We also have to consider other products alongside them too such as Retirement Interest Only (RIO) mortgages and standard mortgages. Whilst as a Mortgage Broker I can help with a standard mortgage or RIO, you need additional qualifications to advise on lifetime mortgages (such as equity release). As these, quite rightly, require additional work on the part of the adviser to ensure they are correct for the client, their situation and their future plans. Currently, when I come across a client I feel would benefit from a discussion about lifetime mortgages, I refer these to a specialist broker that deal exclusively in this area. They do not form a large enough part of the enquiries I see to justify me taking the qualifications and doing this business myself; you need to be doing them regularly to be safe and confident you know the market well enough to deliver great advice. If the amount of enquiries ever changes I may need to revisit this, but currently I am happy that the referral partner we deal with does an excellent job.

At present we do not attract sufficient volume of ER business to maintain competency. As such we are happy to refer to specialists in our network whose fees are very competitive and who offer a fair revenue share; I know the client outcome is going to be good and we are well remunerated for the origination. ER is still misunderstood and treated with suspicion by consumers. This perception is wrong, ER is a heavily regulated market sector because all customers are considered vulnerable, so the product terms are ethical and equitable by necessity. We see the market growing and hope to be able to offer the valuable advice in house in the future.

Any Mortgage Broker who has not yet realised the importance of working with an Equity Release specialist is missing a huge opportuinity for their clients and their business growth. First TIme Buyers deposits are increasingly coming from parents who have released Equity from their property. Firms who have clients who paid off their mortgage often get these clients return wanting to raise funds for Home Improvements or debts consolidation. IFAs use Equity Release specialists to help with IHT mitigation. Equity Release is the future.

We have recently moved into the ER market, the market its self is growing incredibly quickly Record amounts of property wealth were accessed via equity release products in Q4 and across 2021 by more than 76,000 new and returning customers, according to the Equity Release Council. With those numbers in mind there is defintlay a place for it, with the older generation more mobile and able to enjoy their retirement. Many ER products now also have the flexibility to treat them like a interest only mortgage but without many of the hurdles the older generation face when taking one out.

Mortgage options for older borrowers have improved significantly over the last few years and now include conventional (term) mortgages, retirement-interest-only (RIO) and lifetime mortgages. It is certainly true to say that the old-school mentality whereby consumers spend their lives working in a safe job, building up a pension pot and then retiring without a mortgage, is rather out-dated considering the reduced buying power of pensions in real terms these days. Most mortgage advisers recognise the place for diverse later-life lending solutions and this should be embraced by all as positive evolution in the mortgage market.

We are currently planning our move into Equity Release to service our current niche with Mortgages for Teachers, adding this extra arrow to our quiver. We have got one qualified ER advisor with more wanting to get qualified this year. As a business we try and cater to every need a customer may have as long as we are able. This means we can help our clients without having to send them away to a third party.

As the clients we look after get older, as a firm, it's important that we understand the Equity Release market so we can continue to give quality advice and maintain those relationships. There's a strong and improving range of later-life options for clients out there. A combination of RIOS, TIOS (term interest only) and Equity Release will in many cases cover the needs of later life customers The space is so much better set up than before and it needs to be. A big driver is older borrowers looking to refinance interest only debt that's not wanted by the main banks. Additionally, many older people are trying to help their offspring get on the housing ladder or repay debt, so Equity Release has a strong place in the market as long as good advice goes with it.

Equity release is certainly a growing market and two years ago, I made the decision to hire an inhouse adviser. I could have opted to use a third party. But as the advice is so specialist, I wanted to ensure that our clients received the right advice for their needs. Especially, given its negative perception. Thankfully, much work has been done to overturn this and many older borrowers are now seeing the benefits this fantastic product can offer. With cheap rates and readily available products, it can be a great vehicle in supporting an individual’s retirement. So, why wouldn’t we want to offer this to clients? As mortgage brokers, we should cater for every age group within the housing sector, from first time buyers to downsizers and unfortunately probates. It’s not only our job, but a huge, missed opportunity if we do not.