The equity release business development manager answers questions posed by one of his colleagues at LV=
Q: What are your views on the current equity release market?
A: The equity release sector is going through a significant transformation and we are definitely moving away from the old market into the new. Some of the obvious reasons for growth in recent years include lack of adequate pension provision, the interest only mortgage ‘time bomb’, people living longer and many being asset-rich and cash-poor. Another area of significant growth has been supporting family members to get onto the housing ladder which has simply become unattainable for many people.
Providers are also influencing the change by making regular product improvements, increasing flexibility for equity release clients. It is clear to me that the retirement landscape is constantly changing and customers need to adapt to the financial climate. For most homeowners their property is one of their biggest assets, so it’s critical that they are aware of the options available to them. I have been working in the Equity Release sector for a number of years now, helping customers realise their retirement ambitions and it’s fair to say that the increasingly flexible and innovative lifetime mortgage products in the market today are proving attractive to customers.
Q: What’s the typical equity release customer profile?
A: Equity release might not suit every customer, but it should definitely be considered as an option when planning their retirement. Advisers play a critical role in looking holistically at all customer assets when assessing the most effective way to fund their ‘second life’ (their retirement).
Our customer profile data shows that most people seeking to benefit from taking out a lifetime mortgage are in their late 60s. And women between 65 to70 are increasingly looking to equity release products to provide financial security in retirement – in fact 56% of our lifetime mortgage customers are women. Some of the main driving factors behind their choice are: clearing mortgage, loans or debts; home improvements; gifting to family; supplementing their income and; funding holidays.
Q: What are the main challenges in the sector?
A: Firstly, we all have a big challenge to improve customer awareness of the equity release options available to them and dispelling the myths associated with them. Whilst there has been a tremendous progress in this area there is still some way to go. No longer is equity release the product of last resort and as a sector we have many examples of customers doing the most amazing things in retirement, as a result of taking out a lifetime mortgage.
Secondly, we need to grow the number of advisers who are involved (directly or indirectly) in the market. We need to give advisers the tools and confidence to stay on top of the constantly developing product features. What’s more, lenders need to offer more extensive technical support and business development ideas.
Q: What do you do at LV= to ensure customers are protected?
A: We have been a leading equity release provider for over 10 years and we are a member of the Equity Release Council. We take customers’ protection really seriously and always have their best interest at heart. That’s why we do a series of pre-application checks at quote stage to avoid any unpleasant surprises down the line. We have an effective process in place to honour customer interest rates, even if the property has been down-valued by up to 10% from the original estimate. Additionally, we also hold the interest rate for the client for up to 75 working days to provide certainty and a smooth customer journey.
We offer a downsize protection option on our Lifetime Mortgage Lump Sum+ product once the plan has been running for five years. We also have clear and defined early repayment charges which end after 10 years. What’s more, our equity release products come with our LV= Doctor Services, so customers can benefit from expert medical services at no additional cost.
This article was supplied by LV=. Other firms that wish to be featured on the Council website and in its newsletter should contact to [email protected]
