One day, advisers in the sector can be dealing with an 85-year-old who wants to release their equity to fund the trip of a lifetime, and the next day they could be helping a 55-year-old customer release equity to meet an interest-only mortgage shortfall, something we will be seeing more and more of. It is, therefore, great for advisers and customers alike that OneFamily are joining the equity release market with a product that does sound like it will deliver lots of flexibility.
This new product will allow customers to pay some or all of the interest accrued each month for either a pre-selected term or for the lifetime of the loan, make irregular voluntary capital payments or simply allow the interest to roll up and compound. More interestingly, it will also offer variable interest rate pricing which, for some, may be contentious, as the interest rate will have a cap. There will also be downsizing guarantees, fixed early repayment charges and an option for customers to stop paying the interest and switch to another product.
As more lenders are joining the market, more choice is being presented to our growing customer base – and that’s always good news. Homeowners over 55 are being presented with the widest and most flexible lending in retirement market for years, and new products from new lenders benefit us all.
This new product offering is evidence that equity release can evolve, innovate and change to meet the needs of our clients. It is essential that other providers look to innovate more and continue to offer choice to the customer, but the FCA and the regulators can also do their part. The recent announcement that lenders will be allowed to ‘switch off’ affordability assessment in certain cases, is a big step towards further success and flexibility in the industry, but more can and should be done.
For now however, we should all look to welcome OneFamily to our own equity release family. Their new offering is an interesting and innovative first foray into the lifetime mortgage market, and we will all be watching and hoping that this product is one which our clients need. For the rest of the family, I think that revisiting the current structure of what products are on offer and looking to add flexibility wherever possible will lead to yet more interest in equity release as a whole.