The option to offer your equity release clients enhanced terms means advisers should always ask them about their health situation, according to Dean Mirfin of Key Retirement.
Speaking at the FSE Manchester event on Wednesday, Mirfin was highlighting the growth in the sale of enhanced lifetime mortgage products whereby clients could secure preferential terms.
“With enhanced lifetime mortgages your clients could receive either higher LTVs or better rates,” he said. “For many customers, especially those with interest-only mortgages, without an enhanced lifetime mortgage, they can’t get the LTV they need. This is why advisers should always ask about the client’s health and be clear to them why it’s important that they answer honestly.”
Mirfin also outlined a major growth area in the equity release sector – clients utilising the products to fund purchases. “There are now a phenomenal number of people using equity release to fund a purchase,” he said. “These can be for second-home purchases, for example, buying overseas where the client doesn’t want to give up their UK property, or more likely to be brand-new house purchases where the client uses the equity release to purchase a new home. Here the sale value of their existing home isn’t enough to fund the full amount of the new purchase and they use equity release to fund that shortfall.”
He also urged advisers to ensure they were forging close relationships with estate agents when it comes to funding such purchases. “We’re finding that estate agents are factoring into their work a lot more that people are using equity release in order to purchase,” he said. “Estate agent awareness is going up and we’re getting a lot more referrals from agents.”
Speaking with Mirfin, Adam Carnell of Age Partnership said that there was a definite need for more advisers in the equity release market: “If the market is going to grow, we need more advisers talking about it,” he said. “We’re anticipating 26% year-on-year growth in equity release lending in 2017; we expect it to reach £2.7 billion and believe this is the fastest growth sector in financial services.”
Carnell highlighted the drop in interest rates that had been seen over the last couple of years. “You can now get sub-4% rates from the likes of Aviva and L&G,” he said. While Mirfin said the average client was now paying £50k less for their lifetime mortgage compared to two years ago “simply due to the fall in rates”.
He also suggested that there was a growing market for such business: “The more you start to look for equity release customers, the more you will find.”