You are here: Home - Better Business - Business Skills -

We want more brokers advising on equity release – Legal and General

by: Steve Ellis, managing director of Legal and General Home Finance
  • 27/07/2017
  • 0
We want more brokers advising on equity release – Legal and General
More than £700m of equity release lending was completed in Q2 this year. Legal and General Home Finance’s Steve Ellis believes this market is a key way to support maturing interest-only borrowers.

For many people interest-only mortgages have been helpful and recent research by Leeds Building Society has shown that 450,000 interest-only mortgages are on track to be repaid by 2020.

However, there are still a significant number of borrowers who have not set aside the capital in a separate repayment vehicle and simply do not have the ability to repay the outstanding loan.

Their initial intention might have been to downsize when the loan matured, helping them to repay the outstanding capital.

However, that might no longer be their chosen option, or, with a lack of suitable properties, a possible solution.

 

Town or country?

Legal & General’s Last Time Buyers research found the ideal home for the over-55s was a two-bedroom property, located close to family and friends.

With this emphasis on connectivity, it would suggest many last-time buyers would look to urban areas, rather than downsizing to rural parts of the country.

However, these are the very same properties that many of Britain’s first-time buyers look to when making the first step onto the housing ladder.

Couple that with just 2% of the UK’s housing stock being purpose-built for retirees and the problem grows further.

These customers therefore need another choice.

 

Explore options

It is important borrowers explore all potential options for repayment with their financial adviser first, but we believe this conversation should include releasing equity from their home.

For those unable to repay their interest-only mortgage, but not able or not wanting to downsize, this could be a sensible, logical course of action, and this is where advisers have a central role to play.

Whether it’s addressing misnomers about equity release, a simple lack of awareness about the ability to access housing wealth, or just explaining these products to clients, the support and guidance of an adviser can make all the difference.

 

Lenders should do more

We want to see more intermediaries, more of those already qualified to advise on equity release, talking to their clients about these products – and this must include interest-only customers.

Of course, lenders have a responsibility too.

We intend to continue to push forward more of the types of agreements like ours with Santander which is now a year old, and we want to see other lenders doing the same.

Ultimately, this will provide these customers with more choice when their mortgage reaches maturity, and that can only be a good thing.

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • RT @robjupp: Great day yesterday for donations to @MortSleepOut. With Gift Aid, we are now close to £17,000. It would be great to get to £2…

Read previous post:
headshot of Andrew Bailey, CEO, FCA
Banks to transition from ‘unsustainable’ LIBOR

The benchmark lending rate, used by some mortgage lenders to set rates, is unsustainable to produce, FCA head Andrew Bailey...

Close