Issue no.3 July 2017
L I F E T I M E M O RTG AG E
INSIGHT Retirement Included in this issue
Is silver surfer spending keeping Britain afloat?
Retirement finances: Mind over money
Why we need to get clients talking about equity release
By Jane Hanlon, Club Manager, The Premier Equity Release Club
By Nigel Waterson, Chairman, The Equity Release Council
By Alice Watson, Head of Marketing, Retirement Advantage
Page 4
Page 8
Page 17
Please note any information in this magazine is for registered intermediaries and NOT to be issued to members of the public.
Welcome To our July 2017 edition
3 months have simply whizzed by and so many rate changes - all for the better I may add. Never has money been so cheap to borrow! Even better, the consumers at large seem to be warming to the idea of having a mortgage in retirement. Could it be the recent press on care fees have helped them to consider Equity Release to unlock funds from their home before the local authority have chance to access them? Meaning the Equity Release market is set to get a whole lot bigger. Here at the Premier Equity Release Club we are here to help and support with your client’s needs. Simply call on 01326 567970. Without the much appreciated support of Pure Retirement we would not be able to provide you with your free copy. Thank you, Pure Retirement, and especially the marketing team. Both the Premier Equity Release Club and Pure Retirement hope you enjoy this edition of Lifetime Mortgage Insight. We hope you enjoy.
Jane Hanlon, Club Manager, The Premier Equity Release Club
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LIFETIME MORTGAGE INSIGHT
Contents
4 Is silver surfer spending keeping Britain afloat? 6 A great time for advisers to join the ER market 8
Retirment finances: Mind over money
11 Getting the best customer outcomes whilst protecting you and your business 12 An alternative to a drawdown mortgage 13 Interest payment lifetime mortgage keeping on top of the interest 14 Opportunities for growth with funeral planning services 15 The interest only time bomb 16 Solicitors’ panel 17 Following the crowd – Why we need to get clients talking about equity release 18 Product changes from April 1st 19 Contact details and extra services
LIFETIME MORTGAGE INSIGHT Issue no.3 July 2017
Is silver surfer spending keeping Britain afloat? By Jane Hanlon, Club Manager, The Premier Equity Release Club
Running a busy equity release help desk, I decided that I would start to gather some data for an overview of people using the products. I have taken a look at what you don’t see on an application. It was a sample in March 2017 and this is a snapshot of what it told me. People on the sample as an average • Pension
income per household £2,126 represented 76%
• Earned
income per household £4,751 represented 24% (top earners tend not to retire)
• Qualifying
Pension Credit cases 4.76%
• The
income and expenditure showed the outgoings represented 49.67% of income received.
• Meaning
50.33% spare cash left each month, so most are richer now than they have ever been.
• 42%
had savings which over the average sum held is £29,289 So they have plenty of surplus income but the majority don’t have any savings. Somehow somewhere, the money is spent to the tune of 50% of the income generated, and these people have used equity release to get more. It was often thought that those with a lower standard of living took equity release, but the market has changed with the wealthy using it to improve the quality of what is already a good life.
The borrowing on the sample as an average • Loan
size to property value is 23.78%
• Borrowing • Lifetime
47.67%
4
the maximum is 38%
Mortgage to clear mortgage was
The risk on average of the sample • 29%
of joint applications had made provision of income for surviving spouse. Meaning 71% on reduced income.
• 71%
of applications the borrower(s) has children
• 66%
stated funeral costs would come from sale of the property. (Could be interesting if roll up interest and house does not go up in value.)
• 80%
have a will, but only 4.76% have a Power of Attorney (access to reserve in the future) Care fees: the risk of not having Equity Release on your property makes easy pickings for the local authority to register a charge for care! So is Equity Release the saving grace for avoiding some or all of the care fees one way or another? Probate fees with the sample average estate £359,637 at time of application, meaning probate fees of £1,000 (if £500-£1m= £4,000 £1M-£1.6m £8,000, £1.6M-£2M £12,000 if £2m or more =£20,000)
Summary of the sample is they have a good income, the majority don’t have savings with no provisions if things change in the future, and with limited funds to able to bury themselves. But do they care? The silver surfers of which there are many seem to want to enjoy life spending their cash, helping the British economy along the way. The good news is that we have a raft of funding lines wanting a piece of the action, people want and need equity release and the funders are ready to lend. We just need you, the advisers, to advise and recommend. We hope the sample has helped show you the target market and the additional sales potential.
Need any help call 01326 567970 Please note this was a random sample and based on number of cases for the month of March 2017. These figures should not be used in any marketing. It was purely to highlight the average profile of lifetime mortgage clients.
Retirement Providing solutions for your future
Help to grow
Your client’s retirement funds with our range of fee-free* equity release products...
Help to grow
Your business with our bespoke marketing support...
Help to grow
The future of lifetime mortgages... Become an Equity Release Adviser, with step by step guidance and support... For intermediary use only. *Subject to our lending criteria. 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.
Tel: 0113 366 0599 www.pureretirement.co.uk
LIFETIME MORTGAGE INSIGHT Issue no.3 July 2017
A great time for advisers to join the ER market By Paul Carter, CEO, Pure Retirement
The number of people taking advantage of the wealth tied up in their homes has grown to record levels. 2016 equity release lending hit £2.15bn, with this year’s Q1 lending reaching £697million, up by 77% on the first quarter of last year. Couple this with ongoing product innovation, more funding coming into the market, and the market not only growing exponentially but also becoming very competitive with rates typically starting from 3.7% there has never been a better time for advisers to engage. The Equity Release Council’s recent White Paper, ‘Equity Release Rebooted’ points out just how equity release can play a key role in addressing the challenges that an ageing population creates, and it proves just how viable an option it is for many of the socioeconomic challenges our population faces. Secondly, it highlights just how much work is needed to create the greater understanding that is required by customers, and there’s a great opportunity for advisers entering the market to help provide this much-needed understanding and to offer a product range for which demand is ever-increasing.
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Support for advisers entering the market is at an all-time high, with a wealth of resources on hand from the Council and providers alike. Guides on the end-to-end sales process, online portals and calculators, educational webinars and in depth marketing support all make it easier for advisers to start out in the ER industry and to build on their business with step by step support. The Council’s Adviser Guide to Equity Release, launched last year is specifically aimed at advisers new to the market or considering entry, and Pure’s own marketing toolkit for advisers offers bespoke support in the creation of advertising materials ranging from mailshots and press ads to shop front posters and events banners. For use with existing and prospect clients as well as prospect introducers, it provides a comprehensive guide for advisers as to how best to showcase their services. The range of resources available work both to facilitate advisers’ initial transition into the market, and then go on to assist them in the day to day of their ongoing business activities. At Pure, we’re committed to delivering this support-focused service which last year saw us win the Equity Release Award for Best Adviser Support, and the Moneyfacts ILP Award for Best Equity Release Provider. With the market ripe for growth and breadth of support available, there’s no better time for advisers to enter the world of Later Life Lending and the opportunities that Equity Release is able to offer.
Q1
LENDING
+77%
With interest only plans coming to the end of their term for many customers, and with many of these being retirees with no means of repayment, many IFAs and mortgage brokers will be increasingly asked for help by their customers, and whilst equity release is only one solution it is certainly one not to be ignored.
ON LAST
YEAR
GREAT T RETIREMENT MONEY DEBATE MIND OVER MONEY Supported by
The Equity Release Council brings you the 3rd Great Retirement Money Debate on Monday 10th July 2017. Timings: 12.45 – 5pm Venue: Eversheds Sutherland, One Wood Street, London, EC2V 7WS Book your place at www.equityreleasecouncil.com/events With thanks to our sponsors: Aviva, Just and Pure Retirement.
Brought to you by
Speakers include • Baroness Ilora Finlay - National Mental Capacity Forum • Linda Woodall - Financial Conduct Authority • Louise Overton - University of Birmingham • Jane Ashcroft CBE - Anchor and ARCO • Ben Leonard - Meta Finance • David Sinclair - International Longevity Centre-UK • Claire Van Overdijk - Outer Temple Chambers and member of STEP Mental Capacity Global Special Interest Group • Henry Thompson - Association of British Insurers
LIFETIME MORTGAGE INSIGHT Issue no.3 July 2017
Retirement finances: Mind over money
By Nigel Waterson, Chairman, The Equity Release Council
The UK is undergoing unprecedented demographic change. Between 1975 and 2015 the proportion of people aged 65 and above grew from 14% to 18% of the population, with this expected to reach a quarter (25%) of the population by 20451. Staggeringly, those aged over 85 also represent the fastest growing segment of the population2. At the same time, people are also increasingly making use of product evolutions such as drawdown arrangements for pensions and housing wealth, prolonging their horizon for financial decision making. While increased longevity should be celebrated, it comes with the likelihood of more people facing mental or physical capacity issues in later life, posing a challenge to the financial services industry in ensuring financial choices lead to appropriate outcomes for consumers. For example, a drawdown lifetime mortgage – which allows a borrower to withdraw further funds at a later date – might be a great solution for an asset-rich, pension-poor retiree today, but a potential reduction in their capabilities in later life could present an issue further down the line when it comes to taking out additional funds.
£
FCA launched its ‘Ageing population and financial services’ strategy in 2016 and is set to make recommendations later this year on how best the industry can meet the needs of older consumers. Moreover, plans for the creation of a new single public body for financial guidance could help those approaching later life access the information they need to make informed financial decisions. The planned changes could help drive greater engagement, as findings contained with our recent equity release whitepaper highlighted low levels of awareness and uptake of existing public guidance services.
the consumer feels able to ask questions, could help achieve good consumer outcomes. The role of technology is just one example of the contrasting and equally valid points of view that will come together at the event. The issue of managing capacity in later life is not confined to our sector alone and by bringing together a broad range of perspectives we can learn from each other. By working together, we are greater than the sum of our parts.
With demographic change afoot and the way in which people plan for retirement continuing to evolve, there has never been a more important time to address capacity, Given the task at hand in tackling this issue in the coming years, the theme, ‘Mind over Technological innovation could also be part support and access issues for those in later life. It is our hope that the event will of the solution in the longer-term. From a money’, will take centre stage at the third establish a platform from which we can annual Great Retirement Money Debate on future gazing perspective, the debate will explore the opportunity it presents in terms move forward, invigorating us with fresh July 10th, hosted by The Equity Release thinking for the future. of ensuring people are better able to Council. We will bring together a wide array of speakers from across the financial access the finance products they need, so that in the long-term they are able to services and social care landscape, The Great Retirement Money Debate – approach later life from a position of including the FCA, ABI, National Mental Mind over Money takes place on financial stability. Capacity Forum and The International Monday 10th July 2017. Longevity Centre, who will identify the 12.45 – 5pm at Eversheds Sutherland, That said, while technology will play an issues at hand and explore innovative London. increasingly important role, there is also a thinking on the best ways forward. need to understand what is currently To book your place go to appropriate for older people. Our Encouragingly, there is also considerable www.equityreleasecouncil.com/events whitepaper also outlined how a greater work already being conducted to better understand issues related to ageing, emphasis on ‘soft skills’ training, which ONS Overview of the UK population: March 2017 well-being and capacity in later life. The supports a positive relationship in which FCA Ageing population strategy 1 2
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Vida Homeloans – specialists in lending to mature homeowners borrowing into retirement
We lend to mortgage borrowers who are in or are approaching retirement and our flexible underwriting approach is reflected in this recent case study.
Q.
Dear Vida Homeloans, my client is in a bit of a tricky situation as he needs an interest-only mortgage and wants to use the sale of his home as the main repayment vehicle. He will have £167,000 of equity from the sale. My client is aged 65 and intends to work until he is 75 or 76, but the issue we are finding is that most lenders won’t lend on work income past the age of 70. He is less than 12 months into a fixed term employment contract and has more than 12 months remaining. He is also self-employed, but has less than two years’ worth of SA302s.
A.
This type of issue is a prime example of how specialist lenders like Vida Homeloans can really make a difference to borrowers. Not only do we have the flexibility to lend to older homeowners, but we will also take into account other types of income such as private and state pensions when it comes to affordability testing. For self-employed workers, some specialist lenders, including Vida Homeloans, will accept applicants who only have one year’s SA302s. We are also prepared, dependent on circumstance, to lend up to the age of 85 at the end of the term.
Call us now on 03300 246 246
Monday - Friday, 8.30am – 5.30pm. You will incur the same call costs as if you were calling an 01 or 02 landline, which are often included in your mobile monthly allowance. Your calls may be recorded or monitored for training purposes.
Or visit vidahomeloans.co.uk FOR PROFESSIONAL MORTGAGE INTERMEDIARIES ONLY. Vida Homeloans is a trading style of Belmont Green Finance Limited, registered in England and Wales no. 9837692. Registered office: 1 London Road, Staines-upon-Thames, Surrey, TW18 4EX. Belmont Green Finance Limited is authorised and regulated by the Financial Conduct Authority. Financial Services Register Firm Reference Number 738741.
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LIFETIME MORTGAGE INSIGHT Issue no.3 July 2017
Getting the best customer outcomes whilst protecting you and your business By Marketing Team, LV With an expected increase in so-called ‘Property Pensioners’ (retirees relying on some value from their property when they retire – primarily through downsizing, relocating or equity release), it’s certainly the right time to explore equity release for your customers and your business. Last year, a massive 22% (approximately 2.7million people) approaching retirement were looking towards their property to help fund their retirement, with numbers set to increase to 34% by the end of this year.1 So how can your business offer your clients more choice whilst still protecting itself from potential future complaints?
Here are some important considerations: Quality advice from quality fact-find Did you know that last year, retirees spent around two hours more planning for their last holiday or re-decorating a room, than thinking about their retirement?2 It’s therefore important for you to help your clients to think about their retirement dreams and challenges. And here’s where having a good ‘fact-find’ process is key. You should already have a suitable ‘factfind’ in place for your business, if you do not, please contact the Premier Equity Release Club who are able to support you with this. However, how in depth do you go, do you just accept ‘yes’ or ‘no’ answers and how much do you document? It’s essential to recognise how important ‘soft facts’ are and how they may be essential in protecting you and your business from potential future complaints. • Get
your clients to picture themselves in future circumstances and make a note of these - If they’re a couple, what would they do if either of them needed to go into care
22% of retirees are
Property Pensioners - How would they fund adaptations to their house should they need to? - Have
they/are they planning to leave any inheritance for their family? If so, what are their feelings about sharing their retirement plans with their family?
• We also allow loans to be transferred to retirement properties or sheltered accommodation*. You can also be confident that we won’t reduce the LTV available should your client wish to move their mortgage to a retirement property.
their assets – do they have a second or holiday home? Some clients may feel more comfortable to borrow against a second home, as it’s easier to see it as an asset and they tend to have less of an emotional attachment to it than they would if it was their family home.
• We offer both of our lifetime mortgages on second homes as well as a main residence, giving customers flexible borrowing options. We’ve seen some of our customers release money on both properties to achieve their financial goals, others preferring to release capital just from their second home.
Of course a quality fact-find will explore many other ‘what-if’ scenarios; we’ve just highlighted a few above as food for thought.
Please contact our expert sales team, if you would like to find out more or discuss any potential cases.
• Explore
Flexibility At a time where there’s much uncertainty, it’s important to offer your clients a product solution which offers appropriate features to help your clients cope with future changes.
T: 0800 028 8974 E: equityrelease.sales@lv.com Lines open 8.30am – 5.30pm Mon – Fri We may record and/or monitor calls for training and audit purposes. For text phone dial 18001 first.
• Fixed
early repayment charges, making Liverpool Victoria Friendly Society Limited, sure customers have no surprises should Pease House, Tilehouse Street, Hitchin, their circumstances change. Our equity Herts, SG5 2DX release products provide clients with a LV= is a registered trade fixed and transparent charging structure at mark of Liverpool Victoria Friendly Society outset which is easy to explain and easy to Limited and a trading understand. style of the Liverpool
• Making
sure that clients are supported should their circumstances change. We - What would they do if they lost their partner through either death or relationship don’t feel its right to penalise clients that are faced with an unfortunate event of breakdown? someone dying or having to go into long - In either scenario, would they want to term care, so we allow a spouse or partner stay in their own home or can they see 3 years to sell the house without any themselves moving into sheltered penalty. accommodation or down-sizing?
Victoria group of companies. LV Equity Release Limited is registered in England (No 1951289) and is authorised and regulated by the Financial Conduct Authority (register number 306287). Registered address: County Gates, Bournemouth, Dorset, BH1 2NF. Tel: 01202 292333. For UK Financial Adviser Use Only *Subject to terms & Conditions, please visit www.lv.com/adviser/equity-release to find out more. 1. LV= State of Retirement Report 2016 2. LV= State of Retirement Report 2017 research
LIFETIME MORTGAGE INSIGHT Issue no.3 July 2017
An alternative to a drawdown mortgage By Mark King, Managing Director, Crown Equity Release
Walking to the bus stop – my new Fitbit is encouraging me to take more steps per day – I was pondering about the system used in France by retirees to release capital from their property. This method is called a Viager – or, in English, an annuity. Pick up a local paper in France and in the classified property advertisements will be another column for “Viager”. Guy de Maupassant, the prominent French 19th century novelist, wrote a story in the 1880s about a man who wanted to acquire his elderly next door neighbour’s property; he eventually persuaded her to accept his offer which she then spent on the demon drink and as a result did not lead the long life she may have been expecting. Such stories, many of them pure hearsay, now mean that in France – as in the United Kingdom – such equity release plans are regulated. In France the vendor receives an initial capital sum and then a monthly payment from the investor for the rest of their lives; the monthly sum is linked to inflation and should the investor not pay as agreed he forfeits his right to acquire the property. A pretty big incentive to continue paying! The security of tenure of these arrangements was highlighted in a 2014 film “My Old Lady”, starring Maggie Smith as the elderly lady fighting off the late investor’s nephew who had inherited it without realising that there was a life tenancy in place. In the 1990s it came to light that an elderly French lady, a Madam Calmet, had died aged 117 – the longest surviving lady in Europe. In her 90s she had sold her property in Arles in Provence to a local solicitor “en viager”. Alas the solicitor passed away and the monthly payments he had been making ceased, the astute Mme Calmet immediately went to Court because she hadn’t been paid and she received the title deeds on her property back in her own name.
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The same type of arrangement may also be applied to reversionary schemes In England and Wales. There are some differences as the number of monthly payments is restricted to 180 months i.e. 15 years. However the vendor has the option to set the initial capital sum he receives, the size of the monthly payments and the number he receives. This offers much flexibility. Perhaps even more importantly he can secure payments for the rest of his life by selling a part of his property’s value now and then a further slice in the future. Any future sale would be based on the future value and the reversionary pay out for his increased age. As the vendor is effectively giving the investor a mortgage – he is not receiving all the capital immediately – the investor will enhance the monthly payments at 2.5%.
120 monthly payments of £353.61. The total sum they would receive is £63,733, £63,078 and £62,421 respectively.
Let’s put some flesh onto the bones:
Should both the vendors die within the payments period then any outstanding sums are paid to their estate (after being adjusted to present day value) out of the proceeds of sale of the property. If any of the beneficiaries want to purchase the property back they may do so at an agreed valuation.
A couple, both aged 75, wish to release some capital from their £250,000 property to purchase a new car, repay some debt and to increase their monthly income. The reversionary pay-out for a couple of that age is 46% so on a full reversion the largest single cash sum they could receive would be £115,000. As one of them is quite likely to live into their 90s it would be more sensible to conduct a reversion on part of the property. The precise amount they sell is up to them (subject to a minimum of 40%). Let us say they opt for a 50% sale releasing a capital sum of £57,500 which could be taken in a variety of ways: An initial cash sum of £10,000 followed by 120 monthly payments of £447.50, OR an initial cash sum of £15,000 followed by 120 monthly payments of £400.65 OR an initial cash sum of £20,000 followed by
If property values increase by 2.5% per annum (i.e. close to inflation) their remaining share would be worth £160,000 and the reversionary pay-out for them at 85 would be 55% giving a cash sum of £88,000. This could be taken as: A series of 120 monthly payments of £829.50 OR £10,000 + 120 x £735.30 OR £15,000 + 120 x £688.20 OR £20,000 + 120 x £641.0. The number of payments and the amount sold may be adjusted, within the basis of the calculation, to whatever the vendors require, for example the property could be sold in slices of 50% followed by 25% and so on.
This method of equity release may be suitable for many people who are concerned that should they die before expectancy the investor will have made a wind fall profit. An equity release plan that has no early redemption charges and the flexibility to move must be worth the attention of any financial adviser!
Interest Payment Lifetime Mortgage Keeping on top of the interest
Client scenario Jean 64 and Jeremy 62 live in their home in Bristol which is now worth £450,000. They bought their home on an interest only mortgage which is approaching the end of its term and they are worried about repaying the outstanding loan of £40,000, as they only have £30,000 in savings. They are also looking to retire in the next couple of years and would like to use some of their savings to enjoy the early years of their retirement. They’ve decided that they would like to release £50,000 in equity from their home which will enable them to repay their mortgage and use £10,000 for holidays and home improvements without using up all their savings. As Jean and Jeremy have had an interest only residential mortgage, they are concerned about the interest that will roll-up on a new Lifetime Mortgage. They will have a sufficient pension income and would like to use this to pay off the interest on their Lifetime Mortgage, however they would like the flexibility to stop these payments if their financial circumstances ever change.
Product recommendation Jean and Jeremy could consider a One Family Interest Payment product, which enables them to pay back up to 100% of the interest each month. With this product they have the flexibility to stop their payments and switch to an Interest Roll-up or Voluntary Payment Lifetime Mortgage at any time.
Example payment plan Loan amount
Interest payable at 3.70%
Monthly Interest Repayment
Total loan outstanding
Year 1
£50,000
£1,850
£1,850
£50,000
Onwards
£50,000
£1,850
£1,850
£50,000
By paying 100% of the interest they can be sure their loan value will never exceed £50,000. During their term, Jean and Jeremy can stop making payments at any time, if their circumstances change. If for example, they stop making interest payments after 10 years, the interest will be added on to their loan each year. Loan amount
Interest payable at 3.70% £1,850
Amount repaid each year
Total loan outstanding
£0
£51,850
Year 10
£50,000
Year 11
£51,850
£1,918
£0
£53,768
Year 12
£53,768
£1,989
£0
£55,758
Year 13
£55,758
£2,063
£0
£57,821
Year 14
£57,821
£2,139
£0
£59,960
Year 15
£59,960
£0
£62,179
£2,219
Please note, the table above shows years 10-15 as an example only and the loan amount outstanding will increase until the loan ends. Interest rate assumed to remain at 3.70%.
The characters of Jean and Jeremy are fictional examples and the photos are posed by an actor.
LIFETIME MORTGAGE INSIGHT Issue no.3 July 2017
Opportunities for growth with funeral planning services By Mike Jones, Senior Development Manager, Golden Charter
The pre-paid funeral market has more than tripled in size since 2006, with over 183,000 plans sold in 2015 and more than 1.1 million plans now live.1 But given that there are over 23 million people over the age of 502 and only 5% of over 55s have a funeral plan3, the scope for growth is still huge. This is a great opportunity for you to start a new conversation with your current clients, offering them an unrivalled choice of funeral director, with over 3,000 throughout the UK accepting Golden Charter plans. According to SunLife’s 2016 “Cost of Dying” report, the overall cost of dying – which includes costs such as probate, headstones and flowers in addition to the basic cost of a funeral – has risen by 8.3% to £8,802. It’s understandable that many people don’t like to think about their funeral and what will happen when they’re no longer here. However, there are simple ways to plan ahead which can save your clients and their families both worry and expense. The average cost of a basic funeral has increased by 5.5% to £3,897 which is more than twice as much as it was when SunLife first started tracking funeral prices in 2004. A major driver of the increase is the cremation or burial fee, the second largest expense linked to funerals. The UK’s average cremation fee has increased by 6.5%, now accounting for £733, while burials cost almost £2,000 now, a 7% increase. A pre-paid funeral plan from Golden Charter is a safe, simple way to help make things easier for loved ones at a difficult time, and help protect your client’s families from rising funeral costs.
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As the average cost of a funeral continues to rise faster than inflation, now is the time to talk to your clients about taking out a pre-paid funeral plan, which freezes the cost of the funeral director’s services included in the plan at today’s prices. In addition to having peace of mind over finances, a funeral plan also gives your client more control over their funeral arrangements so they know that they will get the funeral they want. The SunLife Cost of Dying Report 2016 states that 41% of people asked didn’t know if their loved ones want to be buried or cremated, and only one in seven know what type of coffin to choose. This uncertainty can cause loved ones unnecessary stress as
£7,049*
The rising cost of funerals £3,897
they will, of course, want to make the correct choices for their loved ones. With a funeral plan from Golden Charter, when the time comes, one call to the funeral director activates the plan and the wishes that were stated will be carried out. This means the family aren’t left with any difficult decisions to make, allowing them to concentrate on supporting one another. As a simple process with many benefits, a pre-paid funeral plan can help your clients make their wishes known and helps to ensure loved ones are taken care of, providing peace of mind for them and their family. Golden Charter is a market leader in later life planning including pre-paid funeral plans and legal services with over 25 years’ experience in helping people take care of their funeral arrangements and later life planning needs.
For further information please contact Jane on 01326 567970
£1,920
1. Funeral Planning Authority Statistics 2004
2016
*Sunlife Cost of Dying Report 2016
By 2026
2. ageuk.org.uk 3. Sunlife Cost of Dying Research 2016
LIFETIME MORTGAGE INSIGHT Issue no.3 July 2017
The interest only time bomb, how Hodge’s 55+ mortgage could help.
A couple come into your office, both in their late 50’s and still working full time they want some advice on their options in retirement, their most pressing concern? Their existing interest-only mortgage and the fact they have not got the capital to repay it in just 5 years time. Previously the most likely and possibly the only solution would have been to sell up, but this categorically isn’t what your clients want, this is their family home, close to their jobs, close to their hearts. Downsizing may be an option but not for many years. They have not been irresponsible, their hope had been that rising house prices over the long term would mean they built up sufficient equity to be able to more than repay the mortgage, this hasn’t happened. What next? This is set to become an all too common scenario with tens of thousands of older borrowers expected to be hit by a shortfall in their endowment policies or simply not having planned for what comes next. As an Adviser are you prepared?
Know your options, consider Hodge Lifetime’s 55+ residential interest-only mortgage for customers aged 55-95, an innovative proposition offering up to 60% LTV based on property value and affordability, with competitive rates from 2.99% and ERC’s from just 2 years. We at Hodge believe there is no such this as a typical older borrower, as experts in later life lending we understand that each situation is unique and with our personal approach to underwriting we are able to look at income from employment through to retirement and most things in between. Your clients could borrow the money they need to pay off their existing mortgage, over a set term from 5 years up to the youngest borrowers 95th birthday, repaying the interest only meaning payments remain affordable. Worth considering? We think so. We also make it as easy as possible for you the adviser with various guides to submission and affordability as well as a mortgage calculator tool. Got a query?
Call our friendly and knowledgeable dedicated Adviser support on 0800 731 4076. Your clients want to pay off some of the capital? No problem, with the 55+ they
are able to pay up to 10% per year from day 1 totally penalty free, with the flexibility to reduce the balance as and when they wish without being tied in. At the end of the term they repay the capital from a specified repayment vehicle which can be downsizing, investments an endowment or sale of a second home, all we ask in the case of downsizing is that they have at least £150,000 remaining equity in the property. What are you waiting for. Choose Hodge Lifetime’s 55+ mortgage, giving your over 55 clients options, peace of mind and flexibility.
LIFETIME MORTGAGE INSIGHT Issue no.3 July 2017
Quick completions for quicker commissions
Top advisers tend to benefit from using Specialist Solicitors
Peter Barton and his team London and Exeter offices
secondary solicitors acting for the lenders
Specialist solicitors are the secret to success when it comes to your Equity Release business.
•
Telephone & write to client setting out requirements and fees.
•
Simple 2 page questionnaire to complete and return.
•
Upon receipt of offer make an appointment for client to visit one of the offices or arrange a local solicitor at additional £90.
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Home visits can be arranged for an additional fee.
•
Broker fee authorities can be deducted from the advance.
•
Aim to complete within 21 days of receipt of offer, subject to the clients being happy to proceed.
STANDARD
BASIC
NEW **London Premier Service** - Completion 5-10 working days quicker than the standard package- Just £750 + VAT + Disbursements of circa £40. - Appointments in London Office, 1 New Fetter Lane. Ashfords will confirm if service available on property.
PACKAGE
£495
+VAT +Disbursements of circa £40 on a no completion no fee.
Positive attitude to equity release Knowledge of the lenders and
If you have any questions or would like to pick Peter’s brains please do call on 07921 233934 or email p.barton@ashfords.co.uk
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Dedicated solicitors for home visits
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Industry leading completion times
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Proven track record, 15 years Equity Release experience
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Outstanding customer feedback Our clients consistently rate my dedicated Equity Release team as outstanding, customer service is key to every business success. Services include:
Kelly Steel, Managing Director Brackley, Buckingham & Northampton offices
STANDARD
BASIC
PACKAGE
£495 +VAT +Disbursements
•
An introductory call to clients on every instruction;
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Quick client questionnaire;
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Clients have a choice, attend one of our offices; solicitor home visit or local arrangement;
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Dedicated case handler with direct access phone and email;
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Efficient and proactive case completions;
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Completion telephone call and letter;
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Client satisfaction questionnaire – responses available on request.
For more information and a quick chat about how I can support your business, just call me on 01604 620890 or email kelly.steel@gilroysteel.com
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LIFETIME MORTGAGE INSIGHT Issue no.3 July 2017
Following the crowd
Why we need to get clients talking about equity release By Alice Watson, Head of Marketing, Retirement Advantage
Retirement planning isn’t your usual dinner party conversation topic. In fact, discussing our finances with our peers is something we’re surprisingly reluctant to do. But this silent approach can be seen as a barrier to equity release. Academic research shows us that we’re heavily influenced by the choices made by those close, or similar, to us. We’re much more likely to do something if we can see that our peers have done the same before us and have benefitted from it. Their positive experience can help us make complex decisions, so it’s important that retirees who would be well-suited to equity release understand that people just like them have chosen this option. What’s more, it’s vital that those in or approaching retirement understand they aren’t alone, whatever their position. For example, carrying debt, even unsecured debt, into retirement is increasingly seen as the norm. In fact, 34% of 60-64 year olds have some form of outstanding debt1. While equity release is growing in popularity as a way to repay and reconsolidate debt, our research has found that just 4% of homeowners say they would consider taking out equity release2. So how do we help more people understand that using their property wealth to repay debts could be a sensible solution? It’s important that clients understand that equity release is safe and regulated, but the bigger impact comes from showing them that people in similar situations have chosen to take out equity release. So, the
next time you sit down with a client, why not keep some examples of people who have unlocked wealth from their property to hand? Case studies are an excellent way of demonstrating the benefits of equity release, dispelling any concerns or misconceptions, and normalising the idea of using property to help fund a comfortable retirement. If you’ve got any real-life anecdotes, even better. You can read our range of case studies at www.retirementadvantage.com/products/ equityrelease/case-studies/ 1
Mintel Report
2
Research for Home Truths was conducted by
Censuswide 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.
LIFETIME MORTGAGE INSIGHT Issue no.3 July 2017
Rate changes from 1st April 2017 Lender
Product
Lowest Rate
Highest Rate
Current 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 New Indexed Max
3.79% 4.79% 4.59% 5.09% 5.59% 3.00% 3.40% 4.54%
3.79% 5.44% 5.34% 5.30% 5.80% 4.00% 4.50% 4.54%
3.79% 5.79% 4.59% 5.09% 5.59% 3.53% 4.03% 4.54%
Just Retirement
Roll Up New Lump Sum Lite Lump Sum Lump Sum C/Back £1000
5.29% 5.29% 5.62% 5.75%
5.29% 5.29% 5.99% 5.75%
5.29% 5.29% 5.62% 5.75%
Legal & General
Flexi Flexi C/B Flexi Plus Flexi Plus CB 2% Flexi Max Flexi Max CB 2% Flexi Max Plus Flexi Max Plus C/B Premier Range
3.82% 4.09% 4.30% 4.50% 5.30% 5.50% 5.69% 5.89% 3.74%
4.14% 4.34% 4.65% 4.85% 5.54% 5.74% 6.24% 6.44% 4.23%
3.82% 4.09% 4.30% 4.50% 5.30% 5.50% 5.69% 5.89% 3.74%
LV=
Flex Lump Sum
6.04% 3.90%
6.04% 4.55%-5.20%
6.04% 3.90%-5.05%
More2life
Tailored Enhanced Capital Choice
6.37% 4.83%
6.37% 5.00%
6.37% 4.83%
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% 5.30% 3.76% 5.50% 4.06% 5.80% 4.27% 6.00% 3.56% 5.30% 3.76% 5.50%
3.56% 5.30% 3.76% 5.50% 4.06% 5.80% 4.27% 6.00% 3.56% 5.30% 3.76% 5.50%
3.56% 5.30% 3.76% 5.50% 4.06% 5.80% 4.27% 6.00% 3.56% 5.30% 3.76% 5.50%
Pure Retirement
Drawdown 1 Drawdown 2 Drawdown 3
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 New Lifestyle Lite New Lifestyle Gold New Lifestyle Gold Plus New Lifestyle Platinum
5.49% 5.99% 5.69% 5.89% 3.99% 4.38% 5.59% 6.58%
5.99% 5.99% 5.69% 5.89% 3.99% 4.38% 5.59% 6.58%
5.49% 5.99% 5.69% 5.89% 3.99% 4.38% 5.59% 6.58%
Please always check lenders rates and commissions as this can change without notice.
18
LIFETIME MORTGAGE INSIGHT Issue no.3 July 2017
Contact details and extra services Lenders
Solicitors
Sourcing
Aviva www.aviva-for-advisers.co.uk 0800 015 4909
Ashfords 01392 334060 £495 + VAT + disbursements for club members. Ashfords London Premier Service £750 + VAT + disbursements for quicker turnaround by 5-10 working days.
Iress- free www.thepremierequityrelease club.co.uk Registration on home page left scroll down.
Bridgewater 08451 4050600
BBH 0800 051 4218 www.bbhlegal.co.uk £695 incl VAT for club members.
Crown 0208 875 5665 Mark King
Gilroy Steel 01604 620890 www.gilroysteel.co.uk £495 + VAT for club members.
Freeben www.freeben.co.uk 30 day free trail and £40.50 per annum with 10% discount per annum for club members.
Hodge Lifetime www.hodgelifetime.co.uk 0800 731 4076
Just Retirement www.justadviser.com 0845 302 2287
Marketing deals available.
Legal & General www.landghomefinance.com 03330 048 444
NEW LPA /WILL Service
LV= www.lvadviser.com 0800 028 8974
Ashfords 01823 232339 £1100 single will and 2 LPA and £1600 joint mirror 2 x Will and 4 LPA’s, includes court costs and VAT. Adviser marketing £75 single & £90 joint for club members.
WEB Services
Website for IFA made to measure from £145 for 12 months. From Freeben, call Jane 01326 567970
More2life www.more2life.co.uk 08454 150 151 Onefamily www.onefamilyadviser.com 0800 802 1645
PI COVER
Pure Retirement www.pureretirement.co.uk 0800 0818 281
The PI Desk Market leading with 18 years experience in FS. Call Jane 01326 567970
Retirement Advantage www.retirementadvantage.com 0800 068 0212
Benefit software.
Equity Release Council www.equityreleasecouncil.com 0844 669 7085
Retirement
Please note any information in this magazine is for registered intermediaries and NOT to be issued to members of the public.