The next decade will see a million interest- only mortgages come to the end of their term.
The Financial Conduct Authority recently released figures that reveal 600,000 loans are due to be repaid by 2020. The typical shortfall is around £70,000. Worryingly almost half have no repayment plans in place. Lifetime Mortgages can offer a perfect solution. However, there is still very little promotion or marketing of this product direct to our clients.
If we look through the eyes of our clients then the problems are very real. Letters are dropping on their doormats asking what they intend to do about the situation. Many have wrongly thought that another interest only conventional mortgage would be on offer from their lender. In reality this is very difficult to obtain following MMR. Lenders are calling in the mortgage and our clients are worrying themselves to sleep at night.
Within our industry we know that Lifetime Mortgages can offer a solution for many of those affected. However, it remains the best kept secret to the vast majority of the public. We have previously looked at the reputation of Equity Release plans and how they have often been viewed unfavourably due to perception of how the plans work.
How many would be able to recognise this as Equity Release?
Age related loan to values up to 55%, free valuation, fixed early repayment charges, no penalty for redeeming after 8 years, fixed interest rates for life, clients can choose to pay some or all of the interest or let it roll up, pay back up to 10% each year without penalty, no affordability checks, no payslips or bank statements required, underwritten against the property not your clients. Adverse credit can be accommodated and all of this is available to your clients from age 55.
The answer to the conundrum is education. There are only a select few advisers who specialise in equity release. The second tier have some knowledge but beyond this how many advisers would confidently be able to explain how modern equity release plans work? We need to invest time to educate ourselves so that we can provide the perfect solution for our clients. Take the message to your client banks and change their lives. Let them live the retirement they desire and take away their worries.
The Right Equity Release and the Premier Equity Release Club are happy to take referrals or help with your education to give you the confidence to write cases yourself.