Issue no.6 April 2018
L I F E T I M E M O RTG AG E
INSIGHT Retirement Included in this issue
Why are so many advisers turning to Lifetime Mortgages?
Divorce in later life: advising the ‘silver separators’
Under pressure? Don’t ignore the warning signs
By Jane Hanlon, Club Manager, The Premier Equity Release Club
By Rob Miles, Head of IFA Sales, Legal & General
By Peter Barton, Partner, Ashfords
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Please note any information in this magazine is for registered intermediaries and NOT to be issued to members of the public.
Welcome
To our January 2018 edition
Over the last few months the club has been inundated with new advisers joining wanting help and support in writing Lifetime Mortgages. It seems everyone wants a piece of the action with this area of financial service beginning to blossom. A mixture of product innovation and receptive borrowers has created a vibrant market place for advisers coming to market. So the challenge is, can Equity Release break all records for 2018? Shall we see what we can do! I am pleased to inform you this is a free publication and is brought to you with the help and support of Pure Retirement. So a big thank you to them from all of us including advisers and support staff. Please enjoy the read and feel free to share.
Jane Hanlon, Club Manager, The Premier Equity Release Club
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LIFETIME MORTGAGE INSIGHT
Contents 4 So, why are so many advisers now turning to Lifetime Mortgages? 6 Innovation and Engagement in Equity Release 8 Be alert to consumer vulnerabilities 10 Divorce in later life: advising the ‘silver separators’ 12 Home is Where the Wealth isbreaking down barriers 14 Learning Zone 16 Under pressure? Don’t ignore the warning signs... 18 Changes to Support for Mortgage Interest, April 2018 20 Contact details and extra services
LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
So, why are so many advisers now turning to Lifetime Mortgages? By Jane Hanlon, Club Manager, The Premier Equity Release Club
There are many reasons:
• Excellent commission rates with an average of 2% per case.
• We are all living longer and therefore less
chance of obtaining a standard mortgage.
• The days of signing them up every 5 years or so for a fixed rate is slowing as we get closer to the age of 60 so lending into retirement becomes an issue.
• Pensioners who have retired and living on lower incomes now may need to release the wealth they have in their home to provide an additional income.
• The Equity Release market is growing
rapidly and potential clients need specialist advice and recommendation from a qualified adviser.
So how do Standard Mortgages and Lifetime Mortgages compare? Standard Residential Mortgage
Lifetime Mortgage
Affordability
Full affordability, payslips and bank statements etc.
Not applicable - better than self - certification.
Contractual monthly payments
Yes- failure to maintain, your home could be repossessed.
Not if you don’t want to - Choice of schemes available where you can select to pay monthly or even any frequency through to set number of optional payments per year. Repossession is only if you do not abide by the lender terms and conditions.
Rates
Low rates through to standard SVR of about 4.74%
Fixed rates from 3.90% - 6.99% Variable from 3.53% linked to CPI
Term
End dates to clear
Open ended
Repayment Vehicle
Repayment or interest only with stated clear exit to repay.
Only requires settlement from sale of property
Reserve facility to draw extra
Not normally
Yes various levels available higher the amount will increase the interest rate.
No negative equity guarantee
No
Yes
Portable
Yes in some cases.
Yes in most cases under the equity release council code. The exception is if the new property fails to meet the lender property criteria.
Solicitors
Some deals available that lender pays cost of legals.
Clients required to get separate legal advice, incurring costs.
So you can see, Lifetime mortgages are more flexible and are the most secure. The potential client has more choice, roll up, pay the interest or pay optional partial repayments? If using the optional partial repayment, it can take the form of a capital and interest mortgage. For example, £100,000 if using the 10% payments per year @ a rate of 5% the loan is cleared within 15 years. Lifetime Mortgages have allowed thousands of people the ability to release the equity in their property giving them financial security into retirement and beyond. We can help your clients achieve their goals as we specialise in product knowledge or it may be that you just need to know that you are on the right track.
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110,000
For more information please do not hesitate to contact The Specialist Equity Release team on
100,000 90,000
01326 567970
80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Year
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3
Start Balance
4
5
With interest
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Repay
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End Balance
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Retirement
Experts in Equity Release The freedom in retirement your clients deserve • More for your customers with our Fee Contributions and Cashback options • Underwriters available as always for you to speak to directly on the phone • Dedicated Telephone Account Manager and Broker Support Team • Face to face BDMs to visit you in the field • Case Tracking facilities in our new online portal • Applications online, paper-based or even a hybrid of the two • Bespoke Marketing Support Team to help you build your business • New Learning Zone, educational materials and updates on the market
0113 3660 599 www.pureretirement.co.uk For intermediary use only. Pure Retirement Limited, 4305 Park Approach, Thorpe Park, Leeds, LS15 8GB 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 MAX RANGE
LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
Innovation and Engagement in Equity Release
Retirement
By Paul Carter, CEO, Pure Retirement
At Pure, we’ve been involved in the recent Premier Release Club event series which has run throughout the whole of March, and it’s events like these which are instrumental in keeping advisers up to date on the latest changes in the market. Lenders too are hosting more and more events, and at Pure Retirement, our recent focus has been our Product Think Tanks, gathering specialists from the industry to discuss future product innovations. A variety of debate on different aspects of the market was discussed, and the focus kept coming back to one particular point of discussion; product innovation and education on the choices available for advisers and customers alike.
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Our Head of Distribution, Chris Flowers hosted the sessions and commented, “The sessions were an excellent way to engage with true experts within our industry and understand the real issues they face in their day to day business. We were able to bring them up to speed on Pure’s plans for the future and how we as a company can help them and grow the market further.” And grow the market will, as interest only mortgages are maturing and pension changes offer no reassurance to those already retired or those trying to plan for retirement. Many are aware that they’re not going to have the retirement they had envisaged, and a breadth of lifetime mortgage options is essential to cater for changing needs and to help fill the gap in later life finance. Recent research conducted by Age Partnership found that on average 68% of respondents will or already do depend on the state pension to fund their retirement,
with 30% of retired people reporting that they’re worried about their finances. With the whole equity release market looking to improve their product offerings, later life lending is a very real solution that could help many with the retirement that they deserve. Research from the Equity Release Council’s latest report suggests that later life lending is attracting twice as many new customers as five years ago, and the range of equity release product options has grown 25% year on year as rates continue to fall. This year will see yet more product offerings and refreshes from providers across the board, with Pure’s own improved Max range going live this March, all 5 star rated by Moneyfacts for 2018. It’s a great time for customers with so many options being opened to them, and the challenge now lies in engaging and educating advisers as to the range of choices available, enabling them to effectively advise the clients in need of their service.
Join us at the Equity Release Council AGM Wednesday 25th April 2018 Council members are invited to attend the 24th Annual General Meeting of the Equity Release Council to be held at Eversheds Sutherland’s London offices on Wednesday 25th April 2018. Delegate registration starts at 10:00am and a lunch will kindly be provided by Eversheds Sutherland. Our packed agenda is taking shape and those speakers confirmed, will be discussing some varied and interesting topics, including: • Council business – David Burrowes – including Director appointments & Latest activity update. • Solvency II – Steve Kyle – the prudential regulation future of Equity Release. • No.10, equity release and public policy - John Godfrey – having been at the heart of government at No.10, John will provide a personal insight into the future of the market and the contribution that ER can make in many public policy challenges. • Improving customer outcomes using LPA Receivers – Tom Black (Eversheds Sutherland) and Sue Joy (Savills) - Exploring how LPA Receivers can be deployed to achieve better customer outcomes. • Valuations – Red Book & more! – Geoff Bramall – A look into the world of a valuer. • Standards Board update – Chris Pond – Board and advisory panel elections and update on the Strategic programme – standards review. Early booking onto the meeting is recommended. RSVPs to attend the meeting should be sent to Sarah Hall at admin@equityreleasecouncil.com
LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
Be alert to consumer vulnerabilities
The Equity Release Council, Consumer Protection Working Group
The Equity Release Council is a consumer focussed trade body and as such we encourage our members to be alert to potential for consumer vulnerabilities. A sample of some case study research and best practice tips was produced to assist members in identifying issues related to duress, fraud/theft, abuse of power and considerations for access to drawdowns. We have outlined a few of the cases and some of the tips below. Case 1 A couple completed an application for a £300k Lifetime mortgage which proceeded to Offer. The Solicitor noticed the information from the clients was inconsistent regarding the purpose of the funds throughout their dealings. It turned out their son wanted the money and was putting his parents under pressure. The Solicitor withdrew from acting and informed the lender.
Case 2 A fraudster posing as a Health and Safety officer called at the home of an existing borrower, saying he had reports of a rat problem. The fraudster tried to convince the borrower he needed to draw down money from his lifetime mortgage reserve to remove a rats’ nest in the loft and carry out repairs for damage the rats had done.
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He told the borrower he’d have to move out because of the H&S risk if he didn’t pay £5,000 by the following day. The borrower called his lender to raise the money from his reserve and the fraudster took the phone from him to ask how much was available, to ‘make sure he’s good for the money’.
Case 3 The daughter of joint borrowers had a Court of Protection Order to act for her father. The initial advance was for home improvements. Shortly after completion the lender received repeated requests for drawdowns, again for home improvements. The daughter was calling on behalf of her father, but the lender also identified that the daughter was pretending to be her mother in some calls.
Best Practice tips
Be inquisitive about drawdown requests and make sure the reason for the extra borrowing is genuine and expected. If necessary, contact the adviser to find out how the customer planned to use the reserve facility they recommended. Check the time between advances. A shorter gap than expected might indicate something is wrong, while a long gap might indicate a change in behaviour. Check with the OPG to ensure a POA has been registered, or a Protection Order is genuine. Make sure such cases are flagged as ‘vulnerable customers’. Involve the original adviser if things look suspicious. Sometimes innocent transactions can look suspicious, but by employing a few additional checks the risks can be eliminated.
Council members can download the full Train staff to keep an eye/ear out for the version of the case studies in the Knowledge and Training area at warning signs and have a clear procedure for referring cases where they www.equityreleasecouncil.com suspect something is wrong. Establish and always make a note of the purpose of the loan, then ask the customer to reconfirm this at different stages. If the purpose changes it might indicate something is wrong. Don’t assume that borrowing for a gift to family is always OK. With drawdowns or further advances, ask whether the borrower is happy making the gift. A few probing questions will reveal whether they are being forced to raise the money. If a new or additional risk is identified, ask the customer to take legal advice before allowing the drawdown or further borrowing.
Introducing our new telephone Business Development Team By Beth Jones, Marketing & Communications Executive, Hodge We’d like to introduce you to Hodge’s resident Tractor Driver, Para-Trooper, Paramedic and world-famous Footballer. (At least that’s what they wanted to be when they were young)! We know them as Lee, Rachael, Joseph and Shane and they make up our telephone Business Development Team. Here at Hodge we're committed to supporting you in all areas of your business. We understand that Later Life lending cases are often complex. Couple this with their sporadic nature and for many advisers this can be an area of high effort.
So how can the new team help you? As the only provider of both Equity Release and later life residential products, it’s important to us that we complement our range with great support. This enables you to be confident and truly support your older customer’s needs.
Lee Weston, the Sales Manager heading up the team has over 20 years financial sector experience with 10 of these in mortgage lending. Before joining Hodge, he spent time working for a major high street lender. In this role he developed and implemented Later Life and vulnerable customer interest only strategy. Rachel is an experienced Relationship Manager with 10 years’ experience in financial services, spanning both customer and intermediary sectors. Joseph has over 5 years of telephony and face to face Relationship Management experience. Shane has over 10 years’ experience in financial services, with 6 years as a Telephony Relationship Manager for a major high street bank. The knowledgeable and friendly team are here to help, get in touch, they’d love to hear from you.
We don’t expect you to know the detail of all our products and policies. The team is here to answer questions and provide guidance. In turn they want to provide quality personalised support for you, creating ease of use of our products in this growing Market.
Here’s how and who to contact: Rachael Williams (South East) - 02920 803006 Joe Morriss (Midlands) - 02920 803007 Shane Brown (South West) - 02920 803009 Hodge, committed to helping you do business with us.
LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
Divorce in later life: advising the ‘silver separators’ By Rob Miles, Head of IFA Sales, Legal & General
Transforming retirement lending with multi award-winning lifetime mortgage solutions
This is not a consumer advertisement It is intended for professional advisers and should not be relied upon by private customers or any other persons.
The impact of divorce in later life Traditionally, marriage was considered, on the whole, to have been ‘for life’. But these days, divorce for those over the age of 60 is on the rise, in contradiction to the decline in rates for younger age groups. Divorce in later years can present financial challenges which are certainly worth considering. Couples must divide their home and their wealth in two (although not necessarily in two equal parts), and deduct the costs of divorce. In an environment where finances may already be under strain, a divorce can put a significant dent in later life finances. The average age of divorce has increased year-on-year since 1985, rising by more than 8 years for both men and women.1
What is behind this rise? There is no single reason, but demographic changes play a role: life expectancy is greater and retirement is more active. Also, social attitudes are changing, reducing the stigma of divorce. There may be greater acceptance that people change over time, and with dedicated
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dating sites for the over-50s, later-life relationships seem possible in a way they might not have done 20 years ago. However, while for some divorce may seem like a welcome step towards freedom, advisers will be well-aware of the negative effect it can have on a couple’s finances. Two-thirds of those who split end up worse off, and more than a quarter resort to selling the family home. Retirement is becoming increasingly expensive. This is due to lower interest rates, the increased difficulty of generating an income from a portfolio of bonds or equities, and the fact that life expectancy has increased, so pension pots and other savings have to go further. Putting divorce into the mix can create a significant hole in people’s retirement planning. The average cost of legal fees in divorce is between £17,000 and £30,000. It may not simply be a case of dividing assets; there are associated costs that reduce the overall size of joint assets. Research has found that the average divorcing couple spent between £17,000 and £30,000 on legal fees. There were also costs associated with paying off shared debt, dividing assets, and finding alternative accommodation.
www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/divorce/bulletins/divorcesinenglandwales/2016 www.moneyadviceservice.org.uk/en/articles/how-much-does-divorce-or-dissolution-cost
Cost of divorce checklist Court fee to file for your divorce or dissolution
£550
Court fee to file for judicial separation
£365
Application for a consent order
£100
Application for a financial order
£255
Negotiated financial settlement
£2,000 to £3,000
A financial application that goes all the way to Up to a contested final court £30,000 plus VAT hearing Consent order after an uncontested financial £250 plus VAT settlement Collaborative family lawyer
£8,000 to £15,000
Online divorce or dissolution service depending on whether a solicitor is involved Mediation service
£400
£100 per hour
LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
What happens after divorce 54% reported one partner staying in the family home 42% split the house 28% reported selling the family home with 13% downsizing and 8% moving into rented accomodation as a result 26% split their savings 21% split furniture 14% split pensions 10% split the sale of their car 6% split family heirlooms 3% split ownership of pets Silver separators’ face other challenges
process that some say is similar to a bereavement. This emotional upheaval may inform their decision-making throughout the financial planning process. For example, in the early stages, they may want to do all they can to stay in the family home, with all its happier associations. However, this may become less important to them as they start to build a new life or if they recognise that the impact on their finances is too great. As a result, advisers may be called upon to be even more flexible than normal, juggling a range of options. Divorce may reduce a number of options for retirees. If they have divided the family home, both parties may find themselves living in smaller properties. As such, downsizing further to raise additional funds for retirement is unlikely to be an attractive option. Most will not want to go through the additional emotional upheaval of buying and selling again. Coupled with this, there are also moving costs to consider: stamp duty, estate agent fees and removal fees are just some examples.
What does this mean for advisers?
Divorce is an area where good advice early on Running two houses can potentially be more can make a real difference. For example, a split where one party gets the house and the costly than running one larger house. Housing costs for Britain’s families has trebled other get the savings may seem fair at first. in the last 50 years, according to a report by However, the fall out may be that one party is tied to real estate which may not, provide any think tank The Resolution. Clearly, with two income. Ideally, financial advisers should be properties there are also two sets of involved as early as possible in the divorce everything to pay, including utility bills, process, so they can help divorcing parties holidays, maintaining the home and the gain clarity on the potential impact of any general cost of day to day life. proposals and help them make informed Divorce may also bring to light any shortfalls decisions. in people’s retirement plans. A pension is usually one of the largest assets in a divorce settlement. For those approaching retirement with a defined benefit pension (also known as final salary scheme), the benefit can be significant in terms of providing a guaranteed income for life in retirement for the person Divorces may not run smoothly, but who is the scheme member. there are places you can direct your A pension may have been enough to support clients to for further information, or simply to speak to other people: one household comfortably, but when it is split and needs to stretch across two Gransnet – www.gransnet.com households, divorcees may well find an Silverline – www.thesilverline.org.uk increased need for income at a time when it is Citizen’s Advice – www.citizensadvice.org.uk very difficult to achieve – for example, if Relate – www.relate.org.uk/relationshipthey’re retired. Some divorcees may have help/help-relationships/relationshipfought to stay in the family home, only to find counselling that this leaves them with a physical asset – the property – but potentially insufficient income to meet their day to day financial needs. Lifetime mortgages could be an
How you can help
There is also the state of mind of potential clients at this time. Divorcees may be making these decisions in a more pre-occupied and emotional frame of mind. They are dismantling a life, and this can be a painful
and removal costs for the person that remains in the house for example – and it can create less upheaval. It could provide valuable emotional security and continuity for the person who remains in the home. Additionally, adult children and their families could still have access to the ‘family home’ and continue to visit. In the meantime, the equity released could be used to ‘buy out’ the other partner, providing part or all of the funds required to secure alternative accommodation. Equally, lifetime mortgages can be an option to help people access additional money to help in retirement. One party may have been granted a larger share of capital assets through the divorce process, but soon realise they need more income. There may be emergencies (such as a leaking roof or a car which needs replacing) and required maintenance. Such expenditure can present a greater burden on a single-person household. A lifetime mortgage could provide much needed access to additional funds and, what’s more, the money released is free of tax. Any lifetime mortgage will need to be part of a broader financial planning discussion as it’s a loan that’s secured against the home. Interest is charged on the total loan amount plus any interest already charged, and the amount owed grows quickly and reduces the equity left in the property. A lifetime mortgage will reduce any inheritance and may affect entitlement to State Benefits. It’s important that clients are helped to consider other options to borrow money which may be more cost effective. It’s worth noting that whilst almost two in five (38%) said their divorce was not amicable, 55% said they were happier as a result. There are plenty of hurdles involved in later life divorce, but this suggests that divorce can work out well in the end.
Some things to consider when giving financial advice around divorce Be flexible – the situation may change a lot – and rapidly Be aware of the impact that divorce can have on clients Try to get involved in the process early to help clients get better outcomes Pension assets may be more valuable than clients realise
important part of the financial planning journey
Lifetime mortgages could be an important part of the financial planning journey
For example, they may help one party stay in the family home. There are some cost advantages to this – it can avoid stamp duty
Raising capital is only one part of the jigsaw, providing income can often be more challenging
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.
LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
Home is Where the Wealth isbreaking down barriers By Alice Watson, Head of Marketing, Equity Release, Retirement Advantage
Our new report, Home Is Where the Wealth Is, reveals that homeowners risk hindering their retirement finances by undervaluing their property as a source of income. We’ve found that 52% of people believe that their property is worth more than their pension, and yet because of a number of misconceptions, many people are still reluctant to consider their property as an asset to use to fund their retirement. We need to encourage those approaching retirement to take a more holistic view of the way all their assets, including property, could provide for them in retirement. The move away from defined benefit pension schemes and a decade of stagnant wage growth has left a generation of people facing a retirement savings gap, yet it seems that there is an inability to see property as a store of wealth, because emotional and psychological ties are still too strong. Our new research also reveals that almost a third of homeowners don’t discuss their financial planning options in retirement with their families. By not bringing their relatives, including their spouses, into the
conversation retirees are further limiting their financial options. 29% of over 55s with a property and a pension don’t discuss their retirement finances with any family members, and more than one in three don’t even discuss their financial options with their spouse. Property as an asset could see a real boost if retirement conversations become more of a family affair. As our research has shown, property is the most valuable asset for most people – but there is a collective blindspot when it comes to property supporting retirement income. This blindspot allows misconceptions to take hold, and retirees could be missing out as a result.
2. Explore how customers’ views on using property wealth change depending on the conversation – the report finds that people are able to think more dispassionately when thinking about property as an asset rather than a roof over their head 3. Look for opportunities to bust popular myths with clients to remove falsehoods around products that involve using property wealth, like equity release. If you’d like to find out more about our latest report, you can download Home Is Where the Wealth Is, or request a free hard copy, on our website www.retirementadvantage.com/adviser
We need to break down the barriers which are preventing people from using their property wealth alongside their other assets. So, here at Retirement Advantage we’ve set out three key tips to help you to break down these barriers, and encourage more holistic conversations about retirement planning. 1. Encourage clients to involve their families with retirement planning, to help address misconceptions about products which may be seen to jeopardise property ownership or inheritance plans.
Footnotes: A Censuswide poll conducted online between 29 November 2017 and 1 December 2017, surveying 1,024 UK adults aged 18 and over who are not retired, own a property and have a pension in place. A Censuswide poll conducted online between 28 and 29 June 2017 surveying 1,005 UK adults aged 50 and over who are not retired, with private or defined contribution pensions. A Censuswide poll conducted online between 5 and 11 October 2016 surveying 1001 UK adults aged 18 and over who are not retired, own a property and have a pension in place.
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LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
Learning Zone Inspired by Pure Retirement’s new Learning Zone on their Online Portal, we are including a new learning zone section in our 2018 magazines, highlighting the events and resources that are readily available to you, keeping you updated on this ever-growing market and helping you to build your business in equity release.
Reports & Webinars
Equity Release Council Spring Market Report
Later Life Learning Pure Spring Term Webinars
Latest series with expert speakers from the market
Click here to find out more...
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Coming this May...
LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
Upcoming Events
Q2 Events Leeds Mortgage Business Expo April 25th
Manchester FS Expo May 16th
In The News
Recent Headlines Equity Release catching up with pensions
Pure Retirement Roadshows June 2018
50% will use work place pensions for retirement income
Pure Retirement launch 5 Star Pure Max Range
Building
Business Your in Later Life Lending
Marketing Support
Pure Service Toolkit
Pure’s Marketing Team are on hand to help you reach your customers, with a whole range of bespoke materials for you to use with your existing clients, prospect clients and potential introducers Click here to find out more...
LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
Under pressure? Don’t ignore the warning signs... By Peter Barton, Partner & Head of Equity Release, Ashfords
Claims against professionals are on the increase; lawyers, accountants, surveyors, and even financial advisors are not immune. These days you can be subject to a claim by someone who is not a client if you have failed to carry out due diligence on your client. For example, you could have been acting for a fraudster, and the other party has relied on the belief that you were acting for that client, and the transaction has resulted in another party suffering a loss. Acting for elderly clients is even more prone to claims; do your clients’ have capacity, are they being put under pressure by their family, is this what they really want to do? It is very easy to fall into the trap of going through the motions with a client, meeting with them, completing the appropriate forms, carrying out the ID and due diligence, without noticing the warning signs. Often the situation has some urgency and before you know it the transaction has been completed, and months or even years later you are faced with a claim. It is only then, when reviewing the file, and with hindsight, can you see the warning signs. So what are the warning signs? Urgency is usually up there towards the top of the list, a sad story, an overbearing relative or spouse who you are authorised to deal with, a transaction that doesn’t quite add up, makes you feel uneasy, or just doesn’t smell right.
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What can you do to avoid a claim? •
Always meet / speak to the client direct (where meeting ensure that you are able to have time to speak to them alone and without family members)
•
Do not just accept authorities without speaking with the client as to why it is necessary and to check that they are in fact authorising it and you have their informed consent
•
Look carefully at the reason why they want to enter into the transaction
•
Make sure that the transaction makes sense for them
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Ensure bank details are provided by post and not email or by telephone
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Ensure that the client is actually living at the address that has been provided (mail can get intercepted by a relative / carer whilst the client is in a residential home)
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If the transaction affects family members (such as in an equity release transaction) then you should encourage the client to let family members know what they are doing Check signatures (no one is expecting you to be a handwriting specialist but sometimes it is obvious that it is not the client’s signature)
•
•
Where you have solicitors involved in the transaction in acting for the client, if you have potential concerns alert them and ask them to meet with the client too. To sum up, if the transaction doesn’t feel right then it probably isn’t. Carry out additional checks and don’t get bulldozered into proceeding until you are 100% happy that you are doing what the client wants. If you have any queries or concerns or you or a client/their family need any legal assistance please contact Victoria Bonnet.
For more information, please contact: Peter Barton Partner p.barton@ashfords. co.uk Direct: +44 (0)1392 334060
Victoria Bonnet Partner v.bonnet@ashfords. co.uk Direct: +44 (0)1392 334103
Alison Shiel Head of Operations a.shiel@ashfords.co .uk Direct: +44 (0)1392 334068
LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
Changes to Support for Mortgage Interest, April 2018 By Kevin Wilkinson, Director, FreeBen
From the 5th April this year, Support for Mortgage Interest (SMI) ceases to be a benefit payment, to be replaced by a system secured loans, called SMI Loans. Whereas previously the government would make means-tested payments to help with the interest component of outstanding mortgages, they will now offer secured loans for this purpose. These loans will be repaid either when the property is sold, or if claimants’ circumstances change (eg if they return to work and become able to afford repayments). Until now, releasing equity from a property might have affected a client’s eligibility for SMI.
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SMI entitlement was calculated by applying a notional interest rate to the amount of mortgage outstanding (capped at £200,000 for retirees and £100,000 for working age clients), and taking the resultant figure into account when performing the overall means test. This needed to be checked as one element of the means tested benefits assessment of Equity Release advice. (In fact this has been something of a grey area; in theory if a purchase mortgage was replaced by an equity release lifetime mortgage, only the SURPLUS capital from the equity release product should be taken into account when calculating the impact on SMI. It is apparent that this was not widely understood by the adviser community or clients.)
Going forward, this change to SMI in fact simplifies the calculation of entitlement to means tested benefits, as it removes one (quite complicated) element from the calculation. Users of FreeBen will note that from 5th April they no longer need to enter the amount of mortgage outstanding on the client’s home. FreeBen is an easy-to-use online Pension Credit and Universal Credit calculator for use by later life advisors, available at an exclusive 10% discount to Premier Equity Release Club members.
LIFETIME MORTGAGE INSIGHT Issue no.6 April 2018
Rate changes from January 2018
Lender
Product
Lowest Rate
Aviva
Flexi Lump
Please note that each Aviva case is individually assessed.
Hodge
Retirement Flexi Life Lump Lifetime Plus Lifetime Max Indexed >55 Indexed Plus Indexed Max
3.79% 4.79% 4.59% 5.09% 5.59% 3.00% 3.40% 4.54%
4.40% 4.29% 4.09% 5.09% 5.79% 5.57% 6.08% 6.60%
4.40% 4.29% 4.09% 5.09% 5.79% 5.57% 6.08% 6.60%
Just Retirement
Roll Up Lump Sum Lite Lump Sum Lump Sum C/Back £1000
5.29% 60- from 4.95% 55 from 5.50% 5.72%
5.29% 5.29% 5.62% 5.75%
5.29% from 4.95% up 55 - 5.50% tiered pricing 5.72%
Flexi Flexi C/B Flexi Plus Flexi Plus CB 2% Flexi Max London & SE Flexi Max CB 2% loaded by Flexi Max Plus 0.02%/0.03% more schemes Flexi Max Plus CB 2% with £599 Arr/fee Premier Range
3.88% 4.09% 4.20% 4.40% 5.01% 5.21% 5.64% 5.84% 3.74%
4.00% 4.20% 4.31% 4.51% 5.11% 5.32% 5.76% 5.96% 4.00%
4.00% up 4.20% up 4.31% up 4.51% up 5.11% up 5.32% up 5.64% down 5.84% down 4.00%
LV=
Flex Lump Sum
6.04% 3.90%
6.04% 3.90%-4.83%
6.04% 3.90%-4.83%
More2life
Tailored Enhanced Tailored Choice Cashback 2.5% Capital Choice Capital Choice Cashback 2% 35K Capital Choice Plus Capital Choice Plus Cashback 2%>35K Maximum Choice Lump Sum Maximum Draw Down
6.33% 6.58%-6.78% 4.74% 5.19% 5.01% 5.38% 5.65% 5.85%
6.37% 6.58%-6.78% 4.84% 5.29% 5.22% 5.48% 5.65% 5.85%
6.33% 6.58%-6.78% up & down 4.84% up 5.29% up 5.01% 5.38% 5.65% 5.85%
Onefamily
Lump Lite CPI Lump Lite Fixed Lump Standard CPI Lump Standard Fixed Voluntary Lite CPI Voluntary Lite Fixed Voluntary Standard CPI Voluntary Standard Fixed Interest Lite CPI Interest Lite Fixed Interest Standard CPI Interest Standard Fixed
3.56% 5.00% 3.76% 5.50% 4.06% 5.50% 4.27% 6.00% 3.56% 5.00% 3.76% 5.50%
5.64% 5.30% 5.85% 5.80% 6.16% 5.80% 6.37% 6.30% 5.64% 5.00% 5.85% 5.80%
5.64% 5.00% 5.85% 5.80% 6.16% 5.50% 6.37% 6.30% 5.64% 5.00% 5.85% 5.80%
Pure Retirement
Max Drawdown 1 Max Drawdown 2 Max Drawdown 3 Cashback option 2.5%
6.29%-6.84% 6.04%-6.59% 6.44%-6.99%
6.39%-6.99% 6.14%-6.74% 6.54%-7.14%
6.29%-6.84% 6.04%-6.59% 6.44%-6.99%
Retirement Advantage
Interest Gold Interest Platinum Voluntary Gold Voluntary Platinum Lifestyle Lite Lifestyle Gold Lifestyle Gold Plus Lifestyle Platinum Lifestyle Platinum C/Back 3% Lifestyle Interest Select Voluntary
5.49% 5.99% 5.69% 5.89% 3.99% 4.38% 5.59% 6.58% 6.88% 6.44% 6.24% 6.64%
5.49% 5.99% 5.69% 6.29% 4.09% 4.48% 5.59% 6.58% 6.88% 6.44% 6.24% 6.64%
5.49% 5.99% 5.69% 6.29% 4.09% up 4.48% up 5.59% 6.58% 6.88% 6.44% 6.24% 6.64%
Legal & General
New New
New BTL & Seconds
Highest Rate
Current Rate
Please always check lenders rates and commissions as this can change without notice.
Contact details and extra services Lenders
Solicitors
PI Cover
Aviva www.aviva-for-advisers.co.uk 0800 015 4909
Marketing deals available if using panel solicitors and lenders £50
The PI Desk market leading with 18 years experience in FS Call Jane 01326 567970
Bridgewater 08451 4050600
Ashfords 01392 334060 £495 + VAT + disbursements for club members
Crown 0208 875 5665 Mark King
Ashfords London Premier Service £750 + VAT + disbursements for quicker turnaround by 5-10 working days
Sourcing
Hodge Lifetime www.hodgeforintermediaries.co.uk 0800 731 4076
BBH 0800 051 4218 www.bbhlegal.co.uk £695 incl VAT for club members
Iress- free www.thepremierequityreleaseclub.co .uk Registration on home page left scroll down
Just Retirement www.justadviser.com 0845 302 2287
Gilroy Steel 01604 620890 www.gilroysteel.co.uk £495 + VAT for club members
Benefit software
Legal & General www.landghomefinance.com 03330 048 444
Poyntons Law 01625 837937 www.poyntonlaw.co.uk £550 + VAT and Dis for club, inc home visit by sols
Freeben www.freeben.co.uk 30 day free trail and £40.50 per annum with 10% discount per annum for club members
LV= www.lvadviser.com 0800 028 8974
Poyntons Premier Service £650 + VAT + Dis for accelerated completion and Weekend appts
WEB services
More2life www.more2life.co.uk 08454 150 151
Marketing deals available if using panel solicitors and lenders £50
Website for IFA made to measure from £145 for 12 months. From Freeben, call Jane 01326 567970
Pure Retirement www.pureretirement.co.uk 0800 0818 281
NEW LPA /WILL service
Equity Release Council www.equityreleasecouncil.com 0844 669 7085
Retirement Advantage www.retirementadvantage.com 0800 068 0212
The Right Will refer to 01326 567970
Onefamily www.onefamilyadviser.com 0800 802 1645
20
Retirement
Please note any information in this magazine is for registered intermediaries and NOT to be issued to members of the public.