The amount of equity released from homes in 2021 is set to top a record £4bn by the end of the year, according to Key. However, in order to facilitate this surge in consumer interest, advisers are having to improve practices and spot the process speedbumps before they cause delays for clients.
With More2life’s own research recently showing that over £750m in housing equity has been delayed by the simple fact that advisers have instructed non-specialist solicitors who are less knowledgeable about the process, it’s clear that even small factors can have a huge impact on the timeline.
So what do advisers need to know about the pre-application period in particular to overcome potential delays?
(E)valuation of the situation
Firstly, it is important to remember that a client may not understand how much their property is actually worth, and therefore the amount that they would be able to release. Unrealistic expectations that aren’t addressed at this pre-application stage can cause significant delays later, should a client be surprised by the amount available to them when it comes to filling in the application.
A background knowledge of valuations can be a great tool to spot and manage unrealistic expectations. A ballpark figure for a property’s value can be easily ascertained via publicly available benchmarks for a given street and it is often valuable to engage with colleagues, surveyor contacts and lenders to establish whether a client’s expectations are accurate.
Spotting the pitfalls early
However, property value is not the only aspect of applying for equity release where clients may have unrealistic expectations. How ‘mortgageable’ their property is will also play a role, and this is an area where even clients with an accurate assessment of their property’s worth may be less well-informed.
Common reasons for an equity release application to be declined can range from proximity to commercial property to having a large proportion of the property covered by a flat-roof. A deeper knowledge of these common reasons can help advisers spot ‘mortgageability’ issues with a property early on in the application process.
Thankfully, providers and chartered surveyor firms have a wealth of educational material that is freely available for advisers to draw from, including underwriting fact sheets and educational videos on the comparable valuation model used by surveyors.
Ultimately, the best way to manage client expectations and avoid delays at this step of the customer journey is to develop a deeper understanding of the equity release process – and with the market growing at its current rate, this also allows advisers to tap into a growth area with more confidence.
Reaching out to lenders to gauge the educational materials they have available, or even for a discussion over the phone, will pay dividends in the long run and could speed up future equity release applications.
This will allow advisers to spend time more efficiently and help clients to unlock their housing equity with less stress.