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Brokers must be tuned in to opportunities around later-life lending – JLM

by: Rory Joseph is director and Sebastian Murphy is head of mortgage finance at JLM Mortgage Services
  • 18/05/2018
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Brokers must be tuned in to opportunities around later-life lending – JLM
For millions of people in the UK facing up to their retirement options and the income they’re going to be able to draw upon, it’s a simple fact that, to misquote a James Bond film, The Pension Is Not Enough.


Research from pension provider Aegon suggests the average pension pot by the time of retirement is now in the £50,000 bracket, which on average would provide a pension income of about £2,000 per annum.

Adding in the state pension and those with such an average pot, might be bumped up to the £11,000 income per year mark.

It’s not a lot, especially when the very same research suggested that most people would need a pension pot of over £1m in order to have the “comfortable” retirement they aspire to.

Clearly, there’s a massive disconnect here, and as advisers it’s vitally important we recognise this gap, and the options we can provide clients.

This is especially so for those who might own their own home and will undoubtedly need to access some of the equity within it in order to supplement their pension income.


Revolution in later-life lending

Of course, it’s not just day-to-day living costs in retirement equity release can help.

We are seeing a growing number of clients looking to access their property wealth in order to help their children or grandchildren onto the property ladder.

Releasing equity to gift deposits to family members is increasing in popularity especially in those areas of the country where property prices mean deposits are out of reach for many potential first-time buyers.

These are just two solutions equity release provides, but there are of course many others – paying off the capital on an interest-only loan, funding long-term care, providing cash for housing renovation or installing assisted living features such as a lift or specialist bathroom, the list goes on.

In that respect, when commentators talk about the revolution in equity release and later life lending we are likely to see in the years ahead, and the sea change in consumer thinking about using their home as an asset, they are not wrong.


Opportunities and responsibilities

Mortgage advisers therefore need to be tuned into the opportunities this presents, the clients who might be suitable, and also their own responsibilities when it comes to presenting product options.

This should be a key part of any adviser’s entry, or ongoing activity, in this sector – making sure you can offer both later life lending and equity release products, rather than just one or the other. Obviously, qualifications are a must, but we insist on our advisers having the necessary knowledge or experience to work across both sectors, which let’s be honest are simply two sides of the same coin.

From a client care perspective – and given the increase in demand and product options for both later life loans and equity release – it is hardly surprising more advisers and firms are advising on these areas to deliver the right outcomes for customers.

We can support advisers who want to make the transition to be active in both of these sectors and offer mentoring programmes to help advisers establish themselves in this space.

If you are not already involved, then you are certainly missing out a growth area which is likely to move in only one direction for the foreseeable future.


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