The Complex World of Equity Release
- Penn Financial
- Apr 16
- 4 min read
When I say that I am a specialist in secured lending for people over the age of 50 the most common response I get is “You do Equity Release then” to which the answer is “yes, that’s a part of it”. The truth is that there is a whole lot more to this particular market than Equity Release, but let’s start with that anyway.
Someone who can say that they are an Equity Release adviser can mean several different things.
The term “Equity Release” is really an umbrella term as it includes both Lifetime Mortgages, which make up the overwhelming majority of business, and Home Reversion Plans, which, although representing a very small part of Equity Release business, still provide a crucial lifeline for some.
Research varies, but about a quarter of people who own a property at age 50 and above still have a mortgage. One in 20 people last year were first-time buyers over the age of 50.
Qualifications and Permissions
Some of these products can be advised by people with standard mortgage qualifications and some others can only be advised by people with specific Equity Release qualifications. Some products can only be advised on when the company itself has more specialist Permissions from the FCA to advise on those products (in addition to the advisor having the relevant additional qualifications.
The Rapid Hybridisation of Equity Release Products
More mainstream lenders are lending into later life, many take differing views on how pension income, investment income, SIPP income and other financial circumstances are used to support their products. Ages at commencement and maximum ages by which a loan needs to be repaid vary widely. It is a complex market, and that is before we get to the complications of family dynamics and vulnerability issues.
In recent years, many Lifetime Mortgage providers and a few mainstream lenders have introduced products such as RIOs (Retirement Interest Only mortgages) and other hybrids. Innovation of products is moving rapidly. That is something that feels a bit weird for me to say, having spent over 35 years in the industry and not experiencing rapid innovation to any great degree before.
The Rapid Hybridisation of Repayment Methods
To add to the complexity, many Lifetime Mortgage providers now have products where a degree of monthly repayment is included as a standard option. Long gone are the days when a Lifetime Mortgage just was a loan where the interest rolled up and you could only make a limited number of repayments if you asked to do so.
New, evolving, flexible products have meant that I am now able to work with a client and create a bespoke plan that can include a monthly repayment amount of their choosing that will mean that their loan will be paid off at a known date in the future (or at least the impact of compounding interest is mitigated against). In effect, a DIY repayment mortgage. One of many possibilities.
Equity Release Specialist
At Penn Financial, when we say we are specialists in lending for the over-50 age bracket, we actually mean it.
I have all the necessary standard and specialist qualifications to advise on all equity release products, and Penn Financial has all the necessary specialist Permissions to advise on all equity release products.
Therefore, we are authorised to advise on Lifetime Mortgages AND Home Reversion Plans. We are Whole of Market, which means we have access to virtually every single equity release lender in the market, not just a single lender.
Coupled with the fact that we are also authorised for mainstream mortgage products, including RIOs and other hybrid plans. When we speak with a client, it is always from the standpoint of starting with the circumstances and the client's needs and wants, the advice process then takes us to whatever the right product reveals itself.
Most of our work comes from referrals from other professionals, including mortgage brokers who want to steer their clients toward a specialist like us. We can even provide evidence for a file to show all options have been discussed, fulfilling consumer duty obligations.
Introducers, such as Solicitors and other financial advisers, appreciate our strict no cross-selling protocols and accountants like us for the added value we can bring to their clients.
For me personally, working in this area is a huge privilege and very satisfying. The outcomes range from saving homeowners from repossession to enabling an octogenarian to experience their ultimate bucket list, and almost anything in between.
The value of property owned by the over-50s is estimated at £2.6 trillion in the UK. From a business perspective, it’s a huge market.
A market that needs personal, tailored advice, that I am delighted to provide.
Please contact me free of charge if you would like to know more.
0333 34 44 34 8
The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.
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