Since 2011 Equity Release lending has more than doubled to £1.61bn.*
Many of the myths surrounding Equity Release have now been busted.
If we go back a decade plans were often sold with fixed rates of over 7% and had limited flexibility. Additional borrowing was generally only allowed after a period of time had passed and we had few mainstream providers involved.
Move forward to 2016 and I am now recommending flexible drawdown schemes to clients starting at 5.07%. I am moving clients from interest only plans with standard variable rates of 4.74%. The competition in the market has brought fixed rates for life down to almost the level of mainstream mortgages. No longer can this be deemed to be expensive.
The minimum release is now £10,000 and then clients can access further capital up to agreed limits if and when required. Drawdown schemes represent 70% of the plans sold in Q4 2015*. No longer is it a major decision as many will access small amounts to make their retirement dreams come true without taking too much risk with the equity in their homes.
We now have 3 of the UK’s largest insurers Aviva, Legal & General and LV= involved in the market. This gives client’s confidence in the brands they are dealing with. Specialist lenders and reversion providers are now able to offer innovative products including enhanced plans underwritten upon health and lifestyle. There is more choice than ever to give clients the perfect features and benefits for their situation.
Product features have been introduced which now allow part repayments of capital or to cover some or all of the interest. This opens the market to clients with different needs than the traditional roll up plans. Clients with interest only mortgages coming to an end are finding a simple solution to move to Equity Release plans. There is no need to worry about affordability or finding suitable lenders later in life as conventional plans come to the end of their term.
Many providers now offer inheritance protection allowing clients to protect some of the equity in their home for loved ones or to use to raise funds in the future. This takes away the fear that you may leave nothing behind for the family and you can choose the amount of the property to preserve for them.
The evolution of the marketplace will continue. The products and importantly, the funding for the providers are now in place for 2016 to set further records. It is a year to be positive about a mainstream product which can help change lives.
The Right Equity Release are happy to take referrals or help with your education to give you the confidence to write cases yourself.
* Equity Release Council 22/1/2016