Often mis-sold, they influenced how the general public saw later life lending and whatever the reality might have been, the public began to see the sector as one that existed to take advantage of the elderly and vulnerable.
Thankfully, through careful regulation (both at a governmental and industry level), the market has become unrecognisable from 30 years ago and is seeing rapid growth as a result.
A culture of responsible lending has permeated the market and has put the customer firmly at the forefront of consideration – the no negative equity guarantee that the industry adheres to being chief among them.
With that in mind, and given the demographic we transact with, it’s important to consider long-term funding and provision of adult care and how equity release can fit into it.
Supporting care needs
More than a third of later life lending applicants at present already release equity to fund home improvements, and it’s fair to assume that some of these will include improving accessibility through additions such as ramps and accessible bathrooms.
Nonetheless, there will be those forced to enter long-term care while questioning how to afford it, especially if they have a partner still wishing to live in their home.
Some may enter into a Deferred Payment Arrangement (DPA) with their local authority, but a DPA is only workable if an individual enters long-term care and their property remains unoccupied.
Housing wealth released through equity release, meanwhile, can be used to pay for temporary periods of residential care and domiciliary care and allows the policyholder and any other residents to remain in their home.
More flexible products can help cater for our customers’ changing needs, especially those entering care.
Flexibility and discussion
Having industry-wide flexibility on products that can better adapt to real-life changes of circumstance is essential to make sure we cater for the needs of our customers.
Opening up discourse between advisers and providers, and creating an industry-wide discussion on catering for customers’ needs, is another tool in equity release’s constant mission to better understand our customers.
Proposals from within the industry include individuals of a certain age ring fencing equity for care, later topped up at a government level and accessed through an equity release product, and for wider planning for future care provisions being more positively promoted.
In the meantime, through understanding our customers’ needs and creating products that better fit them, we can make subtle changes that enrich our customers’ lives by ourselves.