Later Life Lending – Your guide to the market

LATER LIFE LENDING

YOUR GUIDE TO THE MARKET

Brought to you by:

MORTGAGE

INTRODUCER

In association with:

Refer your clients to Key Partnerships The equity release referral specialist

Key Partnerships gives you a risk and hassle-free way to help clients make the most of their �nancial potential by releasing equity from their homes.

Clients aged 55+ could bene�t from specialist whole-of-market advice designed to �nd a plan that suits their requirements.

Start referring today and grow your business

To work with us there’s no need for any specialist quali�cations and we take full compliance responsibility for the equity release advice given. You could earn, on average, £1,536* for every completed case you refer.

Your clients can use the tax-free money released in a wide variety of ways: Take a holistic view of wealth Help �nance a better retirement Home and garden improvements Pay o� existing debts Gifting to family or friends

*2019 average referral payment

0800 138 1663

www.keypartnerships.co.uk

This is intended for intermediaries only and has not been approved for customer use.

Key Partnerships, Baines House, 4 Midgery Court, Fulwood, Preston, Lancashire PR2 9ZH. Key Partnerships is a trading name of Key Retirement Solutions Ltd. Registered in England No. 2457440. CKP697 (01/20). © Key Retirement Solutions Ltd 2020

Contents

The future for later life lending remains bright

L

ike every part of the financial services industry COVID-19 has had a huge impact on later life lending.

Figures from the Equity Release Council revealed that £698m of property wealth was accessed in Q2 - a 34% drop from Q1 2020.

It’s unsurprising and reflected wider lending trends; Bank of 4 Feature England data for April and May showed gross lending secured Will Hale, chief executive of Key on dwellings was down 36% from February and March.

Retirement, reflects on the first half of However, following the easing of the national lockdown 2020 figures have started to recover. Stuart Wilson of Air even went as far as to claim that business levels were now surpassing pre8 Interview lockdown figures.

We catch up with Will Hale, chief The sector has also seen an increase in innovation as it executive officer, Key Retirement to find addresses the unique challenges of the COVID-19 crisis. out how the market is changing Indeed Equity Release Supermarket (ERS) recorded that 83% of advice was conducted over the telephone in April and May, 13 Legal & General Home Finance compared to 55% in Q1.

Answering five common questions Video platform Zoom has become a key way of about equity release communicating with consumers and there are now more opportunities for adviser education than ever before.

17 Equilaw And that education can only be seen as a good thing Tapping into growing later life lending following the regulator’s warning to the sector about the quality market of advice.

A recent review by the Financial Conduct Authority (FCA) 21 Hodge found that some advisers were not hitting the standards that it Why more innovation is needed in the sector would want to see.

The FCA said it had uncovered mixed results, with some 25 more2life cases where lifetime mortgages were working well but it added How the later life lending landscape is that it saw three “significant areas of concern”. changing Those areas included where advice was not seen to be in the best interests of the consumer, including instances where 29 Canada Life advisers did not take into account the personal circumstances The changing face of vulnerability of clients.

The FCA also found the reasons behind consumers looking at 33 Pure Retirement equity release were not always challenged by firms and advisers Finding the right product for the right were not always able to evidence their recommendations. situation However as with everything there are two sides to every story.

You can read more about the FCA’s report in the supplement or 39 Just Group 476563_Moreish_KP_StripAd_130x22mm_HR.pdf 1 01/08/2019 14:48 in the round table on P49 of Mortgage Introducer.

Time to join the later life revolution

You refer, we chat, we advise, you earn… it couldn’t be simpler The equity release referral specialists

Feature

LEARNING THE LESSONS FROM COVID-19 Will Hale chief executive officer, Key Retirement

H

aving worked in financial services for a number of years, I can confidently say the challenges that we have faced in the first six months of 2020 are beyond what most of us could ever have imagined.

It’s been challenging as businesses have had to reinvent their models and safeguard jobs while keeping the fact that their customers are likely to be more vulnerable at this time at the forefront of their minds.

In H1 2020, we saw 19,869 (H1 2019 – 22,126) people take out equity release plans – releasing £1.47bn (H1 2019 £1.68bn) worth of new borrowing.

Having enjoyed a buoyant Q1, much of this change was driven by Q2 when we saw a 27% fall in the number of customers (11,495 to 8,374) and a 45% fall in the amount of new equity released (£949 million to £521m).

As the market changed quarter on quarter so did customer habits with more over-55s using equity release to reduce their debt burden (+7% to 44%) while 4

spending on holidays (-4% to 4%) and home improvements (-3% to 14%) dropped.

At Key, we made a conscious choice to focus on supporting those customers who had pressing immediate needs rather than unfulfilled aspirations and this to my mind drove better more sustainable outcomes.

THE RIGHT ADVICE

While it is hard to predict with any accuracy what the market might look like at the end of 2020, what we can say is that demand remains strong and now more than ever there is a focus on providing the right type of advice for customers.

Far from shoehorning people into unsuitable products, less than 10% of those who contact Key end up taking out equity release and I suspect that this is a trend seen by other brokers too.

Instead, these customers move house, find support from family or decide that this is an option that isn’t right for them at the moment but might be something to discuss further in future.

As an industry, we are learning the lessons that COVID-19 is teaching us and while 2020 may not be remembered for being a year of double digit growth, I suspect we will come out stronger with better systems in place and an even firmer customer focus. 

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Feature

AN UNPRECEDENTED TIME FOR LATER LIFE The effect of interest rates

In H1 2020, interest rates started from 2.57% with the average customer taking out a product with a rate of 3.18% in Q2 and 3.10% in Q1. With 24% of the proceeds of equity release being used to repay an outstanding mortgage, it is interesting to note that these rates are fixed for life and not significantly different from the average SVR that someone might be paying (Bank of England – 3.19%).

The median interest rate that an equity release customer has been steadily falling over the last year and a half from 4.33% (Q1 2019) to 3.10% 2020). However, rose at marginally in Q2 2020 as lenders reacted Will Hale, chief(Q1 executive offiitcer Key Retirement, to the current pandemic by removing some of their product options.

reflects on the first half of 2020

I

Average Interest Rate

With consumers choosing to2020 play it as n H1 2019 the total market size 2019 safe as including available drawdown facility Q1 Q2 Q3 possible in Q4 Q1 2020, Q1there was Q2a 12% increase in the value3.10% of drawdown was £2.4 bin, in H1 2020 the total Median Interest Rate 4.33% 3.92% 3.72% 3.15% 3.18% reserved - £340m in 2019 to £390m in market size is £2.1bn, a year on year 2020. decrease driven by current socioeconomic conditions.

As might be imagined much of the INDUSTRY IMPACT growth was seen in Q1 before we saw a However, across H1 as a whole drawdown signifi cant slowdown is actually 12% down year-on-year from The impact of age in Q2.

Theresuggests was a 10% decrease YOY in(i.e. those under £706m to £624m – release highlighting impact Analysis that younger borrowers 65) take out equity to fulfil athe specific pressing needof – often repayment of debts (54%) – while older borrowers look support their families the number plansthe taken out from coronavirus has had ontothe industry in the (36%). Given fact to that they can(H1 borrow less due to their age and need of a lump 22,126 (H1 the 2019) 19,869 2020). second quarter the sum, year.these products are morevalue popular younger The ofamongst new plans also age sawgroups. a 12% Given the unprecedented circumstances decrease from £1.68bn to £1.47bn in 2020. the UK and world finds itself in due to →

Quarter of Issued Date 2020 Q1 2020 Q1 2020 Q1 2020 Q1 2020 Q1 2020 Q2 2020 Q2 2020 Q2

Age

55-59

60-64

Product breakdown based on age Drawdown

Lump Sum

27.56%

72.44%

34.03%

65.97%

65-69

44.19%

55.81%

75+

53.94%

46.06%

70-74

50.88%

49.12%

55-59

29.98%

70.02%

65-69

43.44%

56.56%

60-64

40.83%

59.17%

2020 Q2

70-74

47.88%

52.12%

2020 Q2

75+

54.78%

45.22%

Guide to Later Life – brought to you by Mortgage Introducer Half Year, 2020

5

9

ers by age

rage age pped to 70 ompared 019 where rage age

Number of customers Value of new plans taken out

Feature Total value of plans

H1 2019

H1 2020

Q1 2020

Q2 2020

22,126

19,869

11,495

8,374

£1.68 billion £2.4 billion

£1.47 billion

£949 million

£2.1 billion

£1.32 billion

£521 million

£767 million

Lending Mix

Area

%

East Anglia

6%

East Midlands

6%

London

17%

North East

2%

North West

7%

Northern Ireland Ireland which is not surprising due to lower population figures and reduced product availability.

Scotland

1% Instead, the South West saw 2,266 new plans taken out and the North West came in third place with 1,983 new plans. That said, the South4% East (£484 million) and London (£281 million) saw 30% the highest value of equity release in the UK due 12% to the high property prices in the Capital and commuter belt.

3%

When Southtaking East a view across the UK at the number of equity release plans taken out the South South West East retains its top spot with 4,879 plans taken out (-10% YOY). London – which typically sees Wales the second highest number of equity release customers in the UK – slipped to fourth place as it West Midlands experienced a 24% drop in the number of people Yorkshire & products Humberside using these (1,762).

7% 5%

Total

100%

(Q1 2020 vs. Q2 2020)

H1 2019

22,126

Number of customers

£1.68 billion

Value of new plans taken out

£2.4 billion

Total value of plans

6 Scotland

South East

18%

Q1 2020

19,869

11,495

£1.47 billion

COVID-19, the equity release market has been remarkably resilient – especially given the political and economic uncertainty we Customers by status Area also saw in 2019.

60% of those released equity East Anglia CUSTOMER CAUTION are couples, up 1% compared East Midlands Customers are to remaining H1 2019cautious when choosing London the amount they wish to release, there was a 3% decrease in the average North East from £76,064 (H1 2019) to loan amount £74,014 (H1 2020).

North West 25% The average property values23% of Northern Ireland

H1 2020

Q2 2020

Half Year, 2020

£949 million

£2.1 billion

£1.32 billion

Lending Mix %

60% Couple

8,374

£521 million

£767 million

14% Single male

6% 26% Single

female6% 17% 2% 7% 1%

15%

Guide to Later Life – brought to you by Mortgage Introducer

4% 30%

5

Feature

lease

those who have taken out equity release have remained roughly the same - 1% increase year-on-year from £318,571 to £321,209.

With rates remaining relatively low, 12% of customers are choosing to switch from an existing equity release plan to either reduceadvice their interest rates or increase s new market leading their borrowing - this is a 7% increase dvisers to capture more in-depth year-on-year.

Value of equity release by usage

16%

improve their home and/ or garden

6%

ces and reasons for using equity

LATER LIFE IN FIGURES

go on holiday Interestingly there was a 2% increase in the number of customer taking out equity or friends. Of those who gifted, help with house release to help with deposits (40%), pre-inheritance (24%)regular and debtbills.

Up to half of customers (48%) take out repayment (11%) were popular uses. equity release to pay off some form of debt With Q2 2020–being an through extremely uncertain timeof unsecured either repayment gift money to their for most people, it is(29%) interesting to note that we debt or mortgage debt (19%).

Value of equity release by usage family or friends have seen the amount spent on holidays halve Gifting remains popular with 29% of (-4% to 4%) and the amount spent on home customers using equity release to gift to or garden renovations fall as well (-3% to 14%). friends family.

Gifting – potentially to and/or help struggling family The average agewhile for repaying those releasing members has remained consistent equity in 2020 remained relatively static at improve their home paying off debts mortgages (+6% to 31%) has risen in popularity and/ or garden loans, credit cards) as older borrowers prepare challenging 70 (71 – H1for2019).

Value of equity(e.g. released vs. proportion of people us economic timesWhen ahead. we look at the UK in terms of the number of plans taken out London 59% and the South East remain on top – reflecting population density and go on holiday clear their outstanding property value. mortgage Almost a third of equity release plans The Uses of are Equity Release (30%) taken out in the South 27% 19% East and nearly a fi ft h are taken out in 29% Q1 2020 Q2 2020 24% London (17%). customers in16% the UK – slipped to fourth 17% The lowest percentage 14% is Northern place as it experienced a 24% drop in the 16% gift money due to their to lower number of people using these products 25%Ireland which is not 31%surprising or friends population figures andfamily reduced product (1,762).

12% 13% availability.

Instead, South West saw 2,266Unsecured new Home the & Garden Mortgage debt H 8% When taking a 4% view across the UK at plans taken out and therepayment North West came improvements repayment in third place with 1,983 new plans.

21%the number of equity 21% release plans taken out the South East retains its top spot with That said, the South East (£484m) and 4,879 plans taken out (-10% year-onLondon (£281m) saw the highest value Value of equity released vs. proportion of people using equity release year). of equity release in the UK due to the London – which typically sees the high property prices in the capital and Proportion of people 59%number of equity release second highest commuter belt. 

21%

16%

16%

6%

24%

21%

Proportion of funds

Guide to Later Life – brought to you by Mortgage Introducer

27%

7

Interview

THE KEY ROLE OF LATER LIFE LENDING With later life lending slowly creeping up the agenda, Mortgage Introducer spoke to Will Hale, CEO of Key – the UK’s largest equity release adviser How has the coronavirus impacted the later life lending industry? This sector of the market has kept going while others have struggled!

The later life lending sector typically has more in common with standard remortgages rather than the wider residential market in that people are looking to borrow against their existing property rather than needing to sell their home.

This has meant that, challenges like estate agency viewings and the availability of furniture removal services haven’t been a barrier in order for transactions to proceed. However, given our typical customers are over-70 with many selfisolating there have been many important things to consider in terms of how we can best support individuals.

At Key and across the sector, a huge amount of work has gone into moving to telephone or virtual advice appointments so we can continue to help those who need us.

Surveys were a sticking point in the early days of the crisis but most lenders moved quickly to remote valuations and the legal industry has also adapted quickly to ensure that clients can access independent legal advice.

It has been a joint effort to keep the 8

industry moving and credit needs to go to the Equity Release Council who have helped facilitate collaboration across multiple stakeholders whilst ensuring the maintenance of standards alongside the implementation of new flexible models.

All that being said, we’ve still seen a material drop in the value of equity released in Q2 2020 as not only did we need to deal with the aforementioned operational challenges but advisers and customers are being rightly cautious about progressing long-term financial decisions given the current uncertainty.

Increasingly advisers are looking at technology as a solution to some of their challenges. What do you think about that?

While I would like to claim that the later life lending industry is at the forefront of both processing and customer facing technology, this just isn’t the case and the pandemic has highlighted that the sector has significant room for improvement in this area. This is something that Key Group is keen to tackle across our advice, manufacturing and intermediary services propositions.

Innovations such as our advice delivery platform that combines fact find, sourcing and suitability report functionality is a

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Interview

step in the right direction but further integration with lender, surveyor and solicitor systems has the potential to reduce admin time and allow advisers to have better quality engagement with customers.

While we are committed to providing face to face advice, the advent of robust video technology is also exciting as it means that more families can be involved in the process and geography poses less of a challenge.

There are lots of positive developments happening and the ‘new normal’ will undoubtedly offer many benefits for customers. However, as a word of caution, it is important that the adoption of new technology is focussed on improving customer outcomes and not just on driving efficiency for other stakeholders.

Not all advisers want to advise on ER so what should they do if they want to offer their clients access to this service?

How do they spot the right partner to work with?

Given how products have evolved, equity release can help many different customer types. If you are a mortgage broker or a generalist IFA, it is important that you are aware of the options available and, if you choose not to offer advice in this area yourself, have a referral relationship in place with a trusted partner.

Later life lending is a complex area so I would suggest that you start by looking for a partner who specialises in this sector – not just someone who is qualified and does a handful of cases.

Also, it is important to establish the type of service your customers will receive e.g. will advice typically be delivered face to face, how are cases managed from application to completion, Finally, choose a partner who shares your values

Will Hale

and is committed to understanding and supporting your business. → Our Key Partnerships division has been working successfully with intermediaries for many years. All our partners currently refer to our whole of market proposition – The Equity Release Experts – who have specialist advisers who can find them the right product for their circumstances.

Referral partners are welcome to attend joint meetings with customers and are kept up to date on progress through all stages of the process. Our experience tells us that good communication is the foundation for a productive long-term referral relationship.

The FCA Review on Equity Release makes interesting reading – what do you think of this?

I welcome the FCA review. As a sector we need to take this seriously and use it as an →

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9

Interview

opportunity to grow and improve.

We need to ask ourselves some hard questions, consider if we are doing the best for our customers and be proactive in making changes in areas where we can do better.

As the UK’s largest advice firm, we are not complacent and have been reviewing the report in-depth to see how we can continue to evolve our advice approach to ensure that we are delivering good outcomes for all customers.

One area that resonates with me is the need to look more holistically at the advice we offer customers. Advice meetings need to be highly personal, to explore in detail individual circumstances and be supported by documentation that work from a customer communication perspective – not as just a way of ticking the compliance box!

That said, it is good that the FCA acknowledged that in their review they had seen some good outcomes where consumers ended up with an equity release product that met their long-term needs.

This marries with my own experience at Key where we regularly see examples of where equity release has changed lives for the better. Housing equity has a vital role to play in supporting people in later life and, when well advised, equity release can be an excellent solution for addressing a wide range of needs and wants.

While older customers are not necessarily vulnerable, they are more prone to vulnerability. What are advisers doing to support them?

I’m really pleased that you started by highlighting that all older people are not vulnerable.

Older people are not one homogenous group and we need to be careful that we 10

don’t pigeonhole them. Vulnerability comes in many forms, from mental or physical health issues to having a sudden change of financial circumstances to suffering a bereavement.

Older customers may be more prone to some of these aspects of vulnerability but every individual circumstance needs to be assessed on its merits.

As advisers, we need to be aware, to probe and ask questions – even if this might make for some uncomfortable conversations.

If someone is vulnerable, this doesn’t mean that they don’t need our help, but it could shape the way in which we might support them.

At Key, we have trained vulnerability champions who will attend an appointment with an adviser if they have flagged any concerns and use their expertise to help guide an appropriate approach for each individual set of circumstances.

All clients who take out equity release receive independent legal advice as part of the process and this is an added layer of security for the client and the family.

This is not something we see with all later life lending products (including retirement interest only mortgages) which is an inconsistency that the sector should perhaps consider moving forwards.

Equity release continues to have a challenging reputation – not helped by things like the FCA report – what can the industry do to change the tide?

Unfortunately, this is a hard question with no simple solution or answer. The issues with products sold in the 90s continue to haunt the industry although they are a world away from current products.

We also find that if family have not been

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Interview

included in the process this can cause problems down the line when children find out about the impact on their inheritance.

However, the reality is that property assets will need to play an increasingly significant role in helping people navigate their way through retirement.

Whilst pension savings remain inadequate for most people, there are billions of pounds tied up in bricks and mortar so we need to focus on educating people as to the benefits of equity release, dispelling the myths and signposting the route to expert advice so they can get the support they need.

Current equity release plans have interest rates that are fixed for life starting from under 2.5%. Many products allow interest to be served and/or ad hoc capital repayments that can mitigate the impact of roll-up interest.

Features such as fixed ERCs and inheritance protection increase the flexibility available and, with appropriate involvement from the family, these features mean that today’s products can be excellent tools for intergenerational wealth planning.

Given the financial pressures of the coronavirus, how do you expect the typical ER customer to change and are we starting to see this?

At the start of lockdown, Key amended its advice philosophy to focus on supporting customers who had pressing needs – such as repaying a mortgage or credit card debt – while encouraging others with more aspirational requirements to delay making a decision.

It is no use taking out money to age proof your home if you can’t actually get anyone in to do the work.

We recently revamped our Key Market Monitor and moved from just looking at the number of customers who used their equity for a specific purpose to the value of equity that is being used.

So, for example we can say that while 32% of people in H1 2020 spent some of the proceeds of equity release on a holiday, only 6% of all equity released was used for this purpose – suggesting that this type of spending is incidental rather than a driver behind taking out one of these products.

To get a better understanding of how the pandemic is impacting customers we looked at how spending had changed between Q1 2020 and Q2 2020.

It suggests that more people are repaying both mortgage (25% vs 31%) as well as credit card debt (12% vs 13%) and fewer people are spending on holidays (8% vs 4%).

That said, financial support for family and friends has remained consistent (21% vs 21%).

The impact of coronavirus on the economy is likely to be far reaching and the equity release sector needs to be prepared to step-up to support more customers than ever before.

Gifting to family is likely to increase as the impact of job losses hits younger generations and the use of equity release to pay for care at home may become a more regular occurrence.

Whilst equity release will continue to be used by some to fund retirement aspirations, it is likely that the coronavirus will accelerate the shift to needs based borrowing.

With more debt being carried into retirement and pension savings being hit by stock market losses, people will look to their bricks and mortar to support essential living costs. 

Guide to Later Life – brought to you by Mortgage Introducer

11

“I won’t own my own home anymore.”

“I’ll end up paying more than the value of my home – my children will inherit my debt.”

Having a lifetime mortgage does not mean your client is selling their home to the lender.

It’s a loan secured against their home that will be repaid when the last remaining borrower dies or moves out of the home and into long term care.

Lifetime mortgages are protected by the Equity Release Council’s ‘no negative equity’ guarantee.

Your client, or their estate, will never owe more than the value of their home. This means they will never have to pay back more than the amount their property is sold for.

A lifetime mortgage is a big financial decision – and a lot of myths still remain about how they work.

We’re here to help you navigate the way with your clients, from a free online study portal to help you get qualified to useful marketing templates to help you explain the benefits of a lifetime mortgage.

Find out how a lifetime mortgage can help your clients: www.legalandgeneral.com/adviser/study A lifetime mortgage is a loan that’s secured against your client’s home. There may be cheaper ways to borrow.

This is not a consumer advertisement. It is intended for professional financial advisers only and should not be relied upon by private individuals or any other persons.

1239488 - Mythbusting Press ad A4 July_AW.indd 1

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28/07/2020 11:56

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Legal & General

FIVE COMMON QUESTIONS ABOUT EQUITY RELEASE DO I STILL OWN MY PROPERTY?

Marie Catch head of mortgage broker sales, Legal & General Home Finance

H

omeowners are preparing for longer retirements than ever before and have increasingly turned to equity release as a way of remaining in their homes, supplementing their incomes and even gifting ‘living’ inheritance to their loved ones.

To meet this demand, the market has grown significantly in recent years and there is far more choice and competition than there ever has been. It’s also much better regulated too.

However, equity release is not always easy to understand, and this has given rise to questions and misconceptions amongst potential borrowers.

As an industry, we have a responsibility to combat these to ensure people are aware of the full range of options available to them.

While equity release will not be right for everyone, for some people it can make a real difference and help them fulfil their aspirations later in life.

Here are some of the most common misconceptions we see from borrowers as they navigate the process.

Yes you do. It’s a common misconception that equity release is a form of selling the home while still retaining the right to live in it.

This is not the case: it means simply borrowing against it, while remaining the sole owner.

Taking out a lifetime mortgage – the most popular equity release product –the owner of the property is never expected to move out until the last owner either passes away or goes into long-term care.

CAN’T I END UP WITH NEGATIVE EQUITY?

Unfortunately, this is a persistent myth – but it is absolutely not the case.

The market is now highly regulated, with much better consumer protections in place than in the past.

If the lender is a member of the Equity Release Council (ERC), any plan will come with a no-negative-equity guarantee.

This ensures the borrower cannot owe more than the value of their home when it is sold, even if that is less than the outstanding amount.

If the home is sold for less than the amount of the mortgage, the remaining debt will be written off.

Usually, once the mortgage has been paid, remaining funds will be paid to the beneficiaries named in the will. →

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13

Legal & General

DON’T I HAVE TO TAKE ALL MY MONEY AT ONCE?

No, there is much greater flexibility nowadays.

A typical lifetime mortgage releases a percentage of housing equity as a lump sum, but people no longer need to take all the money at once – there are plenty of options available.

At Legal & General, we are conscious that steadier income can suit some people better, so we offer the option to ‘draw down’ housing wealth in stages, taking the money in smaller sums, which reduces the amount of unpaid interest that is added to the loan each month.

There are now several products available to suit people with varying needs, such as income lifetime mortgages and products that allow monthly interest payments.

The interest rate is fixed, but if the client chooses drawdown the interest rate applicable at the time of each drawdown will apply.

WILL I HAVE ANYTHING LEFT TO LEAVE MY LOVED ONES?

be more beneficial – not to mention the enjoyment of seeing it making a difference first-hand.

ISN’T THIS AN EXPENSIVE OPTION, WITH INTEREST RATES COMPOUNDING OVER TIME?

It’s possible to choose for the interest to be added to the total amount of the loan.

This means borrowers don’t have to pay off any of the interest over the lifetime of the mortgage, and it is instead repaid when the home is sold.

However, if a person does want to manage the amount they owe, many providers offer the option to repay some or all of the interest.

At Legal & General, we offer an Optional Payment Lifetime Mortgage product, which means interest won’t roll up over time and the original loan amount stays the same.

The equity release market has matured and is now very competitive, with a larger number of providers nudging interest rates down to the lowest they’ve been in years.

This is important to a lot of clients as a lifetime mortgage will reduce an inheritance.

Thankfully there are now plenty of plans available which allow people to safeguard a portion of the net sales proceeds for inheritance.

However, we find that equity release is often used to gift children or grandchildren an early ‘living’ inheritance, allowing families to enjoy it together.

The recipients of such ‘gifts’ may have to pay inheritance tax in the future.

Instead of receiving this when it is ‘too late’, perhaps in their 50s or 60s, it could help support them at a time when it may 14

Guide to Later Life – brought to you by Mortgage Introducer

For adviser use only

Our Lifetime Mortgages at a glance To give you a quick overview of each product and help you compare them with ease, we’ve created the table below. If you have any other questions, please do get in touch.

Flexible Lifetime Mortgage A minimum loan of £10,000

A tax-free lump sum

Optional Payment Lifetime Mortgage

Income Lifetime Mortgage

A minimum loan of £10,000

A minimum initial loan of £2,500

By paying some or all of the monthly interest, your client can reduce the overall cost of the lifetime mortgage

Compound interest is reduced as funds are released in monthly amounts, rather than as a single upfront sum

Can only be made once your client has stopped making the monthly interest payments

Can only be made once your client has stopped taking the monthly income

A tax-free initial loan followed by a regular monthly income for a fixed term The ability to stop taking monthly income at any time with no fee Drawdown available Pay some or all of the monthly interest

by Direct Debit Compound interest Stop making monthly interest payments at any time Optional partial repayments available

Release tax-free cash from their home Stay in and continue to own their home No Negative Equity Guarantee Fixed interest rates No affordability checks Transfer mortgage when they move home Inheritance Protection (this optional extra allows your client to protect part of the value of their home for inheritance) May affect means-tested benefits

To find out more or speak to your dedicated account manager Call 03330 048444

Email enquiries@landghomefinance.com

Visit legalandgeneral.com/adviser/ltm-comparison

Call charges will vary. Calls may be recorded and monitored. Lines open Monday to Friday, 8.30am to 5.30pm. If you’re contacting us by email, please remember not to send any personal, financial or banking information, because email is not a secure method of communication.

Legal & General Home Finance Limited is a wholly owned subsidiary of Legal & General Group plc. Registered in England and Wales number 04896447. Registered office: One Coleman Street, London EC2R 5AA. Legal & General Home Finance Limited is authorised and regulated by the Financial Conduct Authority. Q0058056 Sub 195610 12/2019

THE MARKET LEADING LAW FIRM SOLELY PROVIDING Equity Release Legal Advice Winner of

National Best Conveyancer Awards since 2008

Fixed all-inclusive fee structure Market leading turnaround times 24/7 case tracking online and on mobile(iOS and Android) Troubleshooting and support through our dedicated BRM Team National coverage to meet clients in the comfort of their own home Conveyancing carried out by expert lawyers with over 20 years’ experience Trusted by lenders and advisers to achieve fast completions

YOUR BUSINESS RELATIONSHIP TEAM

Matthew Taylor

Jade Smith

Millie Stevens

Call: 01452 657 999 | Email: bd@equilaw.uk.com Directors: Claire Barker, Simon David, Ailsa Roberts, Edward Dorbin, Jeremy French * and William Matthews*.

Equilaw is a trading style of Equilaw Limited which is registered in England and Wales (No. 07149855) at 1330 Montpellier Court, Gloucester Business Park, Gloucester, GL3 4AH and is authorised and regulated by the Solicitors Regulation Authority (No. 525526). VAT Reg. No. 984 6720 75. (*non-solicitor)

Equilaw

TAPPING INTO A GROWING MARKET Matthew Taylor senior business relationship manager, Equilaw

B

efore the coronavirus lockdown, a kitchen island and modern bathroom were often key factors in how quickly a home would sell.

Now, as potential buyers return to the reopened property market, prospective buyers are seeking more space – whether inside or in the garden.

Across the industry, a surge in demand is being reported for homes with office space and also for properties close to parks, or with a private garden or balcony.

This demand is no different for those in retirement or approaching retirement, arguably, this population demographic may well desire a particular property more than a younger client (i.e. so they can be close to family), and have spent lockdown dreaming of the house of their dreams, and here at Equilaw we have seen a surge in clients wanting to purchase a new home with a lifetime mortgage.

ACCESIBILITY

As lifetime mortgages have become more accessible, the market for purchasing a property using an equity release product has become more commonplace.

At Equilaw, we have seen enquiry levels jump four fold since we started to exit the

nationwide lockdown.

Possibly a sign that clients have had plenty of time to assess their priorities, and moving home to be closer to family, or to a home with a bigger garden has taken more importance.

Or perhaps they may find themselves entering retirement living in a property that is now too large. They may even be in the unenviable position of being forced to downsize due to the looming repayment of an interest only mortgage.

All of these factors have created an unprecedented demand in the property purchase market for retirees, or those close to retirement.

CASH BUYING

→

Not all retirees are in a position to buy their dream home in cash, but what they may not realise is that a lifetime mortgage can provide finance against a new purchase for those borrowers unable to obtain a normal “high street” mortgage.

Estate Agents have started to market lifetime mortgages more aggressively, as they have realised that just because a client may have limited pension income, this doesn’t necessarily preclude them from accessing a mortgage to fund their house purchase.

They can need to consider a lifetime mortgage rather than a traditional high street mortgage.

Access to quality advice is essential, firstly obtaining appropriate advice on selecting their lifetime mortgage product.

Regular TV advertising, and search tools →

Guide to Later Life – brought to you by Mortgage Introducer

17

Equilaw

provided by the Equity Release Council have allowed clients to assess their options, and receive mortgage advice through a channel that suits them.

Once a property has been found, and a lifetime mortgage product selected, focus should now turn to the legal advice that they require.

The proposed purchase (and often the sale of their current property), can be synchronised with the equity release and provide older clients with a much needed input of capital to help purchase their dream retirement home.

Ordinarily, purchasers would involve a residential conveyancer to complete their sale/purchase transaction, but the presence of an associated lifetime mortgage would mean involving a specialist equity release law firm as well.

This is likely to increase costs and turnaround times, and more importantly involve additional parties in the transaction.

FINDING THE RIGHT HELP

We often receive enquires from potential clients, where their traditional conveyancer is unable to advise on the lifetime mortgage.

Meaning that they need to involve a specialist equity release law firm (like Equilaw) to complete that part of the transaction, as well as to liaise with law firm completing the purchase conveyancing.

Not only does this cause additional costs for the clients due the involvement of two law firms, but also creates extra links in the communication chain, and usually delays the purchase of the property – ultimately creating an unhappy client and poor customer journey.

Using finance from a lifetime mortgage does involve additional work, so why 18

not synchronise these elements using lawyers who are experts in all areas of the transaction and have handled hundreds of similar cases in the past?

At Equilaw we have specialist conveyancers who can deal with the sale, purchase and equity release transactions.

Not only is this approach likely to prove more cost effective for clients, remove the need for multiple face to face meetings, and allow quicker turnarounds, but more importantly provide a better overall customer experience.

It is important to speak to your specialist law firm (us) early on in the process so we can discuss the complexities of any proposed purchase and associated lifetime mortgage.

COMPLICATED CASES

Some cases are more complicated that others – particularly new build purchases where timeframes are lot more critical.

We can provide a bespoke quote up front, so your client knows exactly what the total work is going to cost from the outset, and we can gather all of the important information we need (estate agent/developer details, and solicitor information for the other buyers/vendors in the immediate chain).

We can also help signpost important milestones in the overall process, so as to ensure that the client knows what to expect and when.

By following these simple steps, not only can you tap into the ever growing market involving older clients, new homes and lifetime mortgages, but you can rest assured that your clients will receive a smooth and efficient journey, and ultimately enjoy the house of their retirement dreams.

For more information – please contact me – matthew.taylor@equilaw.uk.com 

Guide to Later Life – brought to you by Mortgage Introducer

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Directors: Claire Barker, Simon David, Ailsa Roberts, Edward Dorbin, Jeremy French * and William Matthews*.

Equilaw is a trading style of Equilaw Limited which is registered in England and Wales (No. 07149855) at 1330 Montpellier Court, Gloucester Business Park, Gloucester, GL3 4AH and is authorised and regulated by the

Solicitors Regulation Authority (No. 525526). VAT Reg. No. 984 6720 75. (*non-solicitor)

Experts in Later Life Lending

Get in touch with our team today: 0800 138 9109 lendingsupport@hodge.co.uk hodgebank.co.uk/intermediaries

Offer your customer greater choice and flexibility With our interest only mortgages and lifetime lending solutions for 50+ consumers

s

Hodge

WHY LATER-LIFE LENDING NEEDS MORE INNOVATION Ryan Davies interim managing director of mortgages, Hodge

T

here is no doubt that our world is changing at an alarming rate and our experiences in 2020 so far are further testament to this.

For businesses within the financial services industry, the need to continuously evolve and innovate has never been more important, particularly in the later-life lending market.

is also a growing need to consider the changing needs and demographics of those over 50, otherwise known as the Baby Boomers.

According to Statistica, there were approximately 4.66 million people in 2019 who were aged between 50 and 54 in the United Kingdom, the most of any age group.

The ONS also predicts that in 50 years’ time, there will be an additional 8.2 million people aged 65 years and over in the UK, a population roughly the size of present-day London. This group of active consumers is simply too large to be ignored and too complex and diverse to be stereotyped or under-serviced.

WHY?

Families and households are more diverse than they have ever been before.

People are living longer and having fewer children and, according to the ONS, co-habiting families are the fastest growing family type since 2008.

More young people are living with their parents for longer and the average age of a first-time buyer has risen to 33 from 30 just ten years ago.

And if you add into the mix that the digital era is bringing fast-paced changes to consumer behaviour, things have never looked more complex.

Whilst the industry has focused on meeting the changing needs of today’s millennial or Generation Y and X; there

WHAT ARE SOME OF THOSE COMPLEX AND DIVERSE NEEDS?

Working into retirement has steadily been increasing over the last 10 years.

Research shows that nearly one in 12 of those over 70 are still working, an increase from one in 22 just 10 years ago.

Alongside this, the state pension age is set to rise to 66 in October 2020, so working into retirement (be it full or part time) is now the new norm.

There is also a group of those aged 50+ who bought an interest only mortgage with a mainstream lender 15 or more years ago, who are now starting to see those mortgages mature with no repayment strategy in place – so heading into →

Guide to Later Life – brought to you by Mortgage Introducer

21

Hodge

retirement with debt is also becoming the new norm.

It’s important not to forget that the bank of mum and dad is still one of the UK’s biggest lenders and with research undertaken by Engine revealing that the pandemic has led to more people wanting to help younger family members financially, we can only expect this to grow in the future. Older households are also more diverse than they ever were before, it’s been widely reported that both marriages and divorces are on the rise for the 65 and over and nearly half of those living alone in 2018 were aged 65 years and over.

All this means that there are more and more complex needs in this age group and there’s no one-size-fits-all for this demographic.

WHAT DOES THIS MEAN FOR THE INDUSTRY?

Whether it be a re-mortgage to continue living in their home, a financial gift, a

22

last time purchase or a way to unlock the wealth in their property to fund their retirement; we need to ensure that older borrowers have as many options available to them as a first or second time buyer.

As lenders our products will need to continue to evolve and diversify beyond what they are today and brokers will need to better understand the complex needs of older borrowers, as well as keep up to date with the mortgage solutions available in the later-life lending beyond equity release.

At Hodge, we are already starting to see our later life customer base evolve, with our average age decreasing and more customers utilising our 50+ and RIO mortgages for purchases and pound for pound re-mortgages.

We need to work together as an industry to develop and offer solutions and advice for older borrowers that are best placed for their unique needs and challenges, making sure we not only address their vulnerability but their modern day circumstances and needs. 

Guide to Later Life – brought to you by Mortgage Introducer

Product Specification Overview Our range of interest only mortgages and lifetime solutions are designed to give older borrowers greater choice and flexibility, no matter what their circumstances. Our dedicated teams of Business Development Managers and Underwriters will work with you to find the right solution for your customer.

50+ Residential Mortgage

Retirement Interest Only Mortgage (RIO)

Retirement Mortgage (Hybrid)

Lifetime Mortgage (Equity Release)

Loans available

£20k - £1m

£20k - £1m

£20k - £750k

£20k - £600k

Lump sum or flexible

Lump sum

Lump sum

Lump sum

Flexible draw down available

Loan to value (LTV)

Max 70%

Max 70%

Max 52% (age dependant)

15-48% (standard) 19%-53% (extended)

Property value

£120k to £3m

£120k to £3m

£120k - £1m

£100k - £1m

Rate options

Fixed or variable

Fixed or variable

Fixed or variable

Fixed

Fixed for life option?

No

No

Fee free options?

Min age at application

50

50

50

55

Max age at application

88

88

88

88

Max age at end of term

95

None

None

None

Repayment vehicle

Required for end of term

Repayed upon death or entering into long term care

Repayed upon death or entering into long term care

Repayed upon death or entering into long term care

Affordability assessed

Monthly interest payments required?

Not required Yes for first 5 years or up to age 80. After, option to convert to roll-up

No

Overpayments (10% pa)

Employed/self employed income up to age 80 considered

Not required

Downsizing Protection / Hodge Early Repayment Promise from Day 1

Get in touch today: 0800 138 9109 lendingsupport@hodge.co.uk hodgebank.co.uk/intermediaries

SECRET SERVICE

more2life

HOW THE LATER LIFE LENDING LANDSCAPE IS CHANGING Dave Harris chief executive officer, more2life

W

hen the clock struck on the dawn of a new decade in January this year, few could have predicted the strange and unfamiliar territory in which we would find ourselves just a few months into 2020 and beyond.

Devastating bush fires in Australia, a global pandemic and international lockdowns have led to a great level of uncertainty for our families, friends and colleagues.

Across the world, people have had to swiftly adapt to a new way of living, behaving and working, while dealing with the fear of job losses, economic uncertainty and societal change.

RETIREMENT MATTERS

Living in the times of a global pandemic is something many of us could never have envisaged, and while the longterm impact of COVID-19 has yet to be seen, it is clear from our latest Later Life Lending Report that financial concerns surrounding the funding of retirement were already high on the agenda for those aged 55 and over even before the

pandemic struck. The report, which focuses on the borrowing habits of those aged 55 and over, was conducted by the Centre for Economics and Business Research (Cebr) and is now in its fourth year.

While previous reports have shown a steady increase in borrowing among this demographic, the impact of COVID-19 means that those aged 55 and over are now expected to borrow £19bn less in 2020 and 2021 compared to 2019.

However, with confidence returning to the market from 2021 onwards, debt levels are expected to rise once again to a staggering £300bn by 2030 – a 42% increase on 2020.

These figures reflect the continued financial challenges that many people face during retirement, a period of time that is now longer than ever before, and serves as a useful reminder of the importance of housing wealth-based products like equity release to help people gain greater financial freedom in later life.

While the global pandemic has brought challenging times for the later life lending industry, with the average customer self-isolating and businesses making significant systems changes, the focus remains on the customer. Indeed, we’ve not seen safeguards maintained; we’ve seen them increased as companies focus on helping customers make sustainable decisions. →

Guide to Later Life – brought to you by Mortgage Introducer

25

more2life

April’s figures from the Equity Release Council (ERC) show that over £1bn worth of property wealth was unlocked by over-55s in Q1 2020, a 7% increase on the same period in 2019. While the picture for Q2 2020 looks different, the numbers do illustrate a steady appetite for later life lending products.

People are living longer than ever before and spending more time in retirement.

Add to this rapidly depleting pension pots, increased debt levels and the spiralling cost of living, now exacerbated by the effects of the pandemic, and it is clear that many more people may enter retirement facing greater levels of financial pressure.

As an industry, it is our duty to work together to educate, inform and provide retirees with solutions that will give them financial security and stability. It is also our duty to ensure we equip advisers with the tools and support they need to continue offering the highest-quality service to their customers.

Indeed at more2life, this is certainly already our modus operandi. Even throughout the pandemic, we remained dedicated to keeping advisers informed of our constantly developing situation as we adapted our systems, staff and plans to the pandemic, sometimes communicating twice daily. We even managed to release the comprehensive Later Life Lending report, never closed our doors to new business and adapted our website to include a COVID-19 news and updates section, which is still kept up to date with weekly service levels.

We were the first lender in the equity release market to begin offering remote valuations, and then were the first lender to begin offering physical valuations once more as lockdown restrictions eased, and ensured a system is in place which 26

maintains the safety of our valuation partners and also our valued customers.

Remote valuations also remain an option for any client unable to have a physical valuation as a result of lockdown restrictions.

Product development has also not slowed; all of our plans now include fixed ERCs, so in the event a customer has to make repayments outside of any ERC-free criteria, they are able to know the exact cost. With the pandemic still changing life we know it on a daily basis, it is imperative that customers maintain control and certainty with any form of borrowing they take.

It is true that our philosophy at more to life is to equip advisers with the tools and support they need to achieve mission success for their clients, and even in the face of a global pandemic, we very remain dedicated to this and will continue to remain so. 

Guide to Later Life – brought to you by Mortgage Introducer

CM15

Plan specifications Innovative plans for your clients

We arm you and your clients with the broadest range of lifetime mortgages and features on the market for added flexibility and protection now and in the future. Our plans come with features such as fixed ERCs, partial repayments, inheritance protection, downsizing protection, and ERC exemptions at no extra cost where your client is eligible.

Plans

Flexi Choice LTVs

5–46%

Extras

Fee free options

Partial repayments

Fixed ERCs

Up to 10% of total cash advance in each 12 month period from loan completion date, from day 1

ERC exemption on death/ admission into long-term care of first borrower Downsizing protection Inheritance protection

Capital Choice 8.5–55%

Cashback available, fee free & valuation fee free

Tailored

Maximum Choice

Prime

21.5–54.5%

22.5–55%

26–55%

Fee free & valuation fee free

Fee free & valuation fee free

(enhanced LTVs available)

Cashback available, valuation fee free

Up to 10% of initial loan amount in each 12 month period from loan completion date, from day 1

Up to 10% of initial loan amount in each 12 month period from loan completion date, from day 1

Up to 12% of total cash advance in each 12 month period from loan completion date, from day 1

Up to 10% of initial loan amount in each 12 month period from loan completion date, from day 1

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

Yes

Yes

No

Yes, lump sum plans only

No

No

Yes

Yes

Yes

Yes

Yes

Yes

For current rates, please log in or register on fastpath,

more2life.co.uk/our-lifetime-mortgages

This is intended for intermediaries only and has not been approved for customer use. more2life Ltd is authorised and regulated by the Financial Conduct Authority.

Registered in England No 5390268. Registered office: Baines House, 4 Midgery Court, Fulwood, Preston, Lancashire PR2 9ZH. CM154 (07/20). © more2life Ltd 2020

CM154 M2L Plan Spec A5 Ad.indd 1

24/07/2020 14:42

A series of webinars from Canada Life experts Our new ‘In the Know’ series of webinars has been created to help you increase your skills, knowledge and experience and the opportunity to gain CPD time.

Topics covered: Retirement • Home Finance Protection • Investments • Wealth Management

Coronavirus Support Hub During these unprecedented times, we want you to know that we’re here to help. In the new support hub you’ll find everything you need including on demand webinars, important product and service updates, plus industry training and CPD modules.

To register for upcoming webinars or to access our webinars on demand visit the Coronavirus Support Hub: canadalife.co.uk/support-hub

Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales no. 973271. Registered office: Canada Life Place, Potters Bar, Hertfordshire EN6 5BA.

CL In the know advert - 210 x 148mm final awk_july2020 copy.indd 1

06/08/2020 16:40

Canada Life

THE CHANGING FACE OF VULNERABILITY Alice Watson head of insurance marketing, Canada Life

T

he impact of coronavirus on the UK population has been staggering. Not only has it pushed individuals who previously may have been vulnerable into deeper levels of uncertainty, but it has also led to an increase in the number of vulnerable customers, as millions of people across the country have been hit by employment instability, reduced income or increased borrowing.

Vulnerability, however, is not a new challenge for the equity release industry although it is something that the industry has become increasingly aware of during lockdown.

While at Canada Life, we haven’t seen a significant increase in the number of vulnerable customers applying for new loans, the isolation many over-55s have experienced has made it difficult for customers to get the right support.

RECOGNISING VULNERABILITY

Over the past few months, not only have we seen an uplift in demand from customers looking to supplement lost income - whether that be to support themselves or loved ones - but also for interest payment holidays.

In our industry, we have always

recognised vulnerability. It’s been a regulatory requirement for some years that any equity release sale is done on an advised basis to ensure the product is properly tailored to customers’ needs, and that customers receive independent legal advice.

However, while this recognition at the point of sale has always been front of mind, the challenges come post-sale when perhaps the customer’s needs have changed over time and the decisions they need to make become more complex as they get older.

The industry was built on lump sum plans, but now a growing number of customers are looking for drawdown → products. This means customers may now need more of an ongoing relationship with their adviser to help them make the right decisions on if and when to access their drawdown facility in later life.

Based on the Financial Conduct Authority’s Financial Lives Survey, the watchdog says that as many as 50% UK adults, “display one or more characteristics of being potentially vulnerable”.

The guidance it published last year sets out four main drivers of vulnerability, ranging from temporary to permanent factors, which include health, major life events, resilience, and capability.

PUTTING RECOGNITION INTO PRACTICE

As an industry, we therefore need to provide advisers with the tools to identify

Guide to Later Life – brought to you by Mortgage Introducer 16:40

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Canada Life

and understand the needs of vulnerable customers, so they are equipped to develop practical solutions.

But we also need to find a better way for customers to put their hands up and say they’re vulnerable.

We’ve already seen a great deal of support from the regulator and industry bodies when it comes to recognising vulnerability, however, the greatest challenge for the industry is around what to do once you’ve recognised someone is vulnerable and what changes to make as a result.

Another important consideration for both lenders and advisers is that customers often don’t consider themselves to be vulnerable, and can find the term offensive.

This is where the industry could benefit from closer engagement with experts in specific vulnerabilities, including charities such as Age UK and Dementia UK or training organisations including Money Advice Trust, to provide both advisers and lenders with techniques they can adopt with customers who are displaying signs of vulnerability.

Training is vital to understanding customers’ needs.

That’s why at Canada Life we’ve not only trained our employees to both identify and handle potential vulnerable customers, but we also regularly host adviser workshops.

These workshops provide advisers with an introduction into the equity release market and advice standards, and include considerations around customer vulnerability.

Advisers must also consider how specific vulnerability can impact the advice required and service delivery, and be aware of the data protection requirements for processing their 30

customers’ personal and sensitive information.

Above all, regular communication is key when it comes to dealing with vulnerable customers - and not only with the customer as an individual. It’s also important to consult and provide education to their family members.

They can be a great sounding board, but we also know that 16% of people used the money they released to support family members in the first half of this year making lifetime mortgages very much a family affair.

However, advisers must be confident that their clients are able to answer questions without coaching or help from their loved ones.

LOOKING AHEAD

As an industry, we need to find a better way for customers to put their hands up and ask for help. Customers are becoming increasingly tech savvy, and we have the opportunity to leverage technology even further to deliver better customer outcomes.

We live in a world where people have emergency alarms in their homes should they fall over and need assistance, so if we could develop a similar kind of central alert system for vulnerable customers to be shared among providers, we would feasibly be able to reduce the amount of information we need from customers.

While the coronavirus pandemic has shone a light on vulnerability, it is - and will continue to be - a challenge for the equity release market as customers’ needs continue to evolve over time.

Ultimately, we need to focus our efforts on how our services are designed and delivered to meet these changing needs, and ensure this is provided in a way that is comfortable for them to access. 

Guide to Later Life – brought to you by Mortgage Introducer

I

e

r

Is your knowledge of equity release a little rough around the edges?

Keep up to date with the latest equity release news and developments at www.mortgageintroducer.com

What does your customer need?

Mr Ha

tter

He wants e om h s i h l l e s to for £165k pTro buy a retire

m operty for £2 ent 05K

Our Heritage Lifetime Mortgage range allows lending on retirement properties provided the property value is over £200k.

H

Heritage Range

Securing the financial future isn’t a game. See how we can help.

0113 3660 599 www.pureretirement.co.uk Pure Retirement Limited, 3175 Century Way, Thorpe Park, Leeds, LS15 8ZB Company registered in England and Wales No. 7240896. Pure Retirement Limited is authorised and regulated by the Financial Conduct Authority. FCA registered number 582621.

Pure Retirement

THE RIGHT PRODUCT FOR THE RIGHT SITUATION Chris Flowers head of sales, Pure Retirement

I

t’s been heartening to witness the way that the equity release market has remained resilient during the current situation – arguably, it’s something that can be attributed to its ongoing flexibility and adaptability which has seen it react to wider changes to continue best serving customers.

CORRELATION

Newly-released data from HUB has highlighted a correlation between amounts borrowed and fund uses, with those borrowing the minimum amount of £10,000 likely to use the released equity to finance holidays and leisure (33%) or home improvements (30%) and those borrowing £330,000 or more would be more likely to use the funds to pay off their mortgage (39%) or refinance current lifetime mortgages (25%).

These latest statistics offer a window into the versatility of later life lending and the variety of customers’ requirements which the market has to satisfy.

The degree to which the market has remained changeable and fluid is also perhaps best illustrated by recent

Knowledge Bank data, with all of the top five broker searches for equity release criteria changing for April and May. Additionally, the three leading search terms for May (‘married couple application in one/single name’, ‘flat roofs’ and ‘lodger/boarder/rent a room’) had only featured in the top five once in the two years that data had been collated.

Amid this backdrop, we’ve committed to working closely with sourcing systems to ensure advisers have rapid access to upto-date information.

This has resulted in us integrating with Iress to be able to offer real-time data to advisers on our plans, and with Advise Wise to offer advisers 60-second KFIs on our products.

We’ve additionally overhauled our own online portal to ensure our brokers have access to all the tools they need to best serve their customers.

It’s inevitable that as equity release has grown in popularity among consumers there’s been a need for greater flexibility in the retirement solutions being made available to consumers, and the market has responded quickly and effectively to these considerations.

The recently-released Equity Release Council Spring report showed large year-on-year increases in the number of products now containing certain features, including regular payments (which saw an 80% rise between January →

Guide to Later Life – brought to you by Mortgage Introducer

33

Pure Retirement

of 2019 and January of 2020), plans to accept age-restricted accommodation (a 126% increase), and ERC-free partial repayments (a 65% rise).

We’ve understood the importance of continued product innovation, and in addition to carefully managing our processes in recent weeks, we’ve continued to develop and enhance our product offering throughout 2020, even during the ongoing pandemic.

This included the widened distribution of our Classic range and a raft of enhancements being made to our Heritage range, the latter of which (to name but one major change) in response to the increasing interest in equity release from those in age-restricted properties by allowing for them in the acceptable property criteria.

EVOLVING

We’ve witnessed first-hand the everchanging nature of customer profiles and increasingly varied spectrum of needs and priorities, and have strived to continue evolving our products to make sure they represent retirement solutions for our client base.

As part of that same commitment, we’ve launched a new option in Heritage Freedom 40, offering up to 40% ERCfree overpayments and 12 repayments per year.

Our latest development is available from age 55 (with no maximum age cap) and offers loan amounts up to £600,000, underlining our commitment to continue innovating even during the most uncertain of times.

While the industry has responded well in terms of product development and the adaptation of certain processes, recent FCA findings have highlighted the need for the market to come together and work 34

holistically to make sure it’s continuing to best serve its customers.

While a lot of the focus of the FCA report is on advice quality, we all must help improve customer experiences - whether it’s through the regulatory framework or lenders reflecting and reviewing the support and the materials they offer advisers to ensure they’re able to best evidence their plan choices to customers.

The FCA findings highlighted a lack of clear evidence available to consumers as to why particular plans have been chosen, as well as a lack of personalisation and clarity of advice.

READY ACCESS

This would suggest that as a wider industry there’s still considerable work to be done in ensuring advisers have ready access to the necessary information to be able to ultimately provide that to consumers, and the assorted elements of the sector should take the time to reflect on how they can assist in this process.

During the pandemic, a lot of focus when it’s come to customer experience has been on procedural flexibility and product innovation.

However, the FCA findings have underlined the necessity for a more holistic approach to ensure customers find the right solution for them, whether that’s from the advice itself or the support that the wider market can offer financial advisers.

With an increasing number of people now exploring later life lending to shore up their finances in these strange times, we need to work harder than ever to ensure they have a positive experience, but also end up with a solution that best suits their needs. 

Guide to Later Life – brought to you by Mortgage Introducer

Minimum age from 55 for single and joint applicants

H

Minimum Property Value £70k (£100k if ex-council / ex-MOD) No Maximum Property Value (please refer if over £2 million)

Freedom 40

Loans available from £10k Drawdown facility available on all products

KEY FEATURES: ERC Free Partial Repayments • Up to 40% of the advance(s) per 12 months • Up to 12 payments per 12 months (minimum payment £500) • ERC free full repayment within 3 years of death or entry into permanent care of 1 borrower if borrowing jointly

N EIG RAN

SO

ER

Minimum age from 55 for single and joint applicants

G

E

V

• Fixed ERCs

O

N

S

G E

Minimum Property Value £70k VE

REIGN

RA

Sovereign Range

No Maximum Property Value (please refer if over £6 million) Loans available from £10k Drawdown facility (minimum £2k)

KEY FEATURES: Sovereign Elite Products for loans over £725,000 • Maximum loan amount on Elite products: £1 million (can refer up to £2 million) Across all Sovereign Products • Maximum loan value across core (i.e. non-Elite) Sovereign range: £725,000 • Our widest underwriting criteria • No restrictions on CCJs, IVAs or Bankruptcy (provided it’s repaid on completion) • Plans are portable and downsizing is available ERC Free (subject to criteria) • ERC free full repayment within 3 years of death or entry into permanent care of 1 borrower if borrowing jointly • Options for Cashback and Fee Contributions • Fixed ERCs

For Intermediary Use Only Company registered in England and Wales No. 7240896. Pure Retirement Limited is authorised and regulated by the Financial Conduct Authority. FCA registered No.582621.

0113 3660 599 www.pureretirement.co.uk

Industryleading leading Industry Industry leading

ADVISERSUPPORT SUPPORT ADVISER ADVISER SUPPORT Industry Reports, Global Pandemics and your day to Industry IndustryReports, Reports,Global GlobalPandemics Pandemicsand andyour yourday dayto to day business- we’re here to support you, we have a day daybusinessbusiness-we’re we’rehere hereto tosupport supportyou, you,we wehave haveaa range of resources, materials and support to ensure range rangeof ofresources, resources,materials materialsand andsupport supportto toensure ensure your business, and your clients, are getting the very your yourbusiness, business,and andyour yourclients, clients,are are getting gettingthe thevery very best outcomes, every time. best bestoutcomes, outcomes,every everytime. time.

Whole of Market Whole WholeofofMarket Market Award Winning Customer Service Award AwardWinning WinningCustomer CustomerService Service Access to our free award-winning sourcing tool Access Accesstotoour ourfree freeaward-winning award-winningsourcing sourcingtool tool Access to Exclusive products Access AccesstotoExclusive Exclusiveproducts products Access to exclusive rates Access Accesstotoexclusive exclusiverates rates Enquiries, support and ‘tricky case’ placement Enquiries, Enquiries,support supportand and‘tricky ‘trickycase’ case’placement placement Increased Benefits with Platinum and Platinum + membership Increased IncreasedBenefits Benefitswith withPlatinum Platinumand andPlatinum Platinum++membership membership Air Rewards points for every KFI, completion and event Air Air Rewards Rewards points points forevery everyKFI, KFI,completion completionand andevent event through the club for through throughthe theclub club

Did you know? – To Qualify for Platinum membership, you only Did Didyou youknow? know?––To ToQualify Qualifyfor forPlatinum Platinummembership, membership,you youonly only need to complete 3 cases per quarter via us, and for platinum need needtotocomplete complete33cases casesper perquarter quartervia viaus, us,and andfor forplatinum platinum plus its only 3 per month! Earning you enhanced rates and plus plusits itsonly only33per permonth! month!Earning Earningyou youenhanced enhancedrates ratesand and products from across the market! products productsfrom fromacross acrossthe themarket! market!

Air Group

TIME TO JOIN THE LATER LIFE REVOLUTION Stuart Wilson CEO, Air Group

F

irstly, let’s begin by steering away from the term ‘equity release’ in favour of the more accurate ‘later life lending’; as recently highlighted by the FCA, the older consumer has a wide variety of product options to consider.

This market is driven by a number of key factors which are driving an ever increasing demand, not only for increasing consumer need, but also for more skilled advisers to look after them.

The population is living longer, pension provision and savings are declining in real terms, and the Bank of Mum and Dad is in ever rising demand.

But this is not a sector to simply jump into. It requires a different set of tools, as the customer journey requires advisers to fully understand their needs, worries, concerns and aspirations in order to ensure the advice process is robust and to the high standard we all need to deliver.

The great news is that there is a huge amount of support, training, technology and experience -you simply need to embrace it.

Borrowing products for consideration

include lifetime mortgages, retirement interest-only mortgages and traditional mortgages with longer maximum ages, as well as second charge lending and even unsecured lending for smaller or shorterterm needs.

Wrapped around these are the more “holistic” knowledge needs to include care funding rules, benefits, pension freedoms, tax and estate planning.

Product innovation is moving rapidly, and gone are the days when the loan compounded as a default.

Today’s later life borrowing product world is diverse and offers you as an adviser a wide choice of products.

Understanding of these other holistic areas will move you to the forefront of your trade as you fully consider the implications and options open to solve your customers’ needs in the most professional way.

Air Group have spent 13 years building the tools and support to ensure the journey is clear and progressive.

At Air Group we have built our business around supporting you to gain all the skills you need.

Air Mortgage Club – free to join, we launched the club in 2007 and it now supports 6,000 members with providing you access to the best procuration fees, access to all lifetime mortgage lenders, as well as RIOs , mortgages and secondcharge products for your clients. Our award winning support desk is there for→

Guide to Later Life – brought to you by Mortgage Introducer

37

Air Group

you Monday to Friday, 9 -5, both by phone or online chat. We are on hand to help place cases, answer provider questions, and supply all you need. We also provide you with FREE access to our multi award winning sourcing tool at www. airsourcing.co.uk.

Then, to complete the support we have the Air Later Life Academy, a subscription offering which provides you with a fully accredited training programme to work through to professional status, with a range of 8 modules you can study from home and take exams online. Structured CPD is awarded and you can choose modules to suit your experience.

Basic level procuration fees are available to all, and then as you build your business we offer uplifts and commercial benefits to give you the benefits of being part of Air Group.

All of this is paired with ongoing regular workshops, training and support, so you

can enjoy developing your experience and knowledge in the market and ensure your clients get the best outcome from a wellsupported adviser.

Finally, it would be remiss not to give you the assurance of the biggest ,most efficient and accurate award winning sourcing platform, Air Sourcing. You can register for free as above, and you are then able to add, for a small cost, upgrades to include benefits analysis reports, criteria sourcing via our super software e-partnership with Knowledge Bank, as well as factfinds and suitability reports ,both free to use. Look out for more exciting enhancements to the platform coming soon!

So, come and join us in the later life lending market. We will ensure each step of your journey is supported, and that you have the very best support at your fingertips to confidently build a successful career in this growing, and exciting sector. 

*

*al

38

Guide to Later Life – brought to you by Mortgage Introducer

Increase your Increaseyour your Increase

EARNING EARNING EARNING POTENTIAL POTENTIAL POTENTIAL

Air Mortgage Club have been leading the way for over a Air Mortgage Club have been leading the way over Air Mortgage Club have been leading way forfor aa decade, and are delighted that we canthe continue toover provide decade, and delighted that we can continue to provide decade, and areare delighted we can continue provide you with industry leadingthat rates.

Through the AirtoMortgage you with industry leading rates.

Through the Mortgage you with leading rates.

Through the AirAir Mortgage Club youindustry have several ways to boost your income.

With the Club you have several ways to boost your income.

With the Club you have several ways to boost your income.

With the industry average proc fee standing at 2.25% we’re confident industry average proc standing at 2.25% we’re confident industry proc feefee standing 2.25% we’re confident that theaverage exclusive rates we achieveatfor our members will aid that the exclusive rates we achieve for our members will that the exclusive rates we achieve for our members will aidaid in increasing your earning potential. increasing your earning potential. in in increasing your earning potential.

Industry Average Industry Average Industry AverageAverage potential Average potential Average potential earning (per case) earning (per case) earning (per case)

£2,070 £2,070 £2,070 Average PROC fee Average PROC Average PROC feefee 2.25% 2.25% 2.25%

Register online Register online Register online Average potential Average potential Average earningpotential (per case) earning case) earning (per(per case)

£2,244 £2,244 £2,244 Average PROC fee Average PROC Average PROC feefee 2.44% 2.44% 2.44%

*all averages are calculated from Air Group data obtained across 2019. *all averages are calculated from Air Group data obtained across 2019. *all averages are calculated from Air Group data obtained across 2019.

Complete 3 cases Complete 3 cases Complete 3 cases per quarter per quarter per quarter Average potential Average potential Average potential earning (per case) earning (per case) earning (per case)

£2,612 £2,612 £2,612 Average PROC fee Average PROC Average PROC feefee 2.65% 2.65% 2.65%

Complete 3 cases Complete 3 cases Complete 3 cases per month per month per month Average potential Average potential Average potential earning (per case) earning (per case) earning (per case)

£3,036 £3,036 £3,036 Average PROC fee Average PROC Average PROC feefee 2.71% 2.71% 2.71%

For more information, call 01452 310777 For more information, 01452 310777 For more information, callcall 01452 310777 email sourcing.enquiries@answersinretirement.co.uk or visit airsourcing.co.uk email sourcing.enquiries@answersinretirement.co.uk or visit airsourcing.co.uk email sourcing.enquiries@answersinretirement.co.uk or visit airsourcing.co.uk

The equity release referral specialists

Help your clients see the ďŹ nancial potential in their home

You refer, we chat, we advise, you earn

www.keypartnerships.co.uk

0800 138 1663

This has been approved for intermediaries only and has not been approved for customer use