Speaking as part of a podcast series – the previous episode of which can be found here – Neil Cadwallader, business development manager (BDM) at Family Building Society, said going down the interest-only route in later life is “not a broadly understood and followed path at the moment”.
Cadwallader added that it was also important to inform the client of the “innovation”, as clients “get to a certain age and they think that’s it, game’s over” and they have to go down the equity release route.
He said Family Building Society “rely quite heavily on normal high street interest-only lending”, which was partially due to affordability, as it can accept four applicants’ income and does not have the death calculation of a retirement interest-only (RIO) deal.
Cadwallader added that it was flexible and well-priced and the manual underwriting approach could accommodate more complex cases.
“I think the innovation is twofold, one in product and two, again, in that wonderful word of education,” he said.
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This was echoed by Stuart Heavens, BDM for the South Coast, who discussed encouraging education, especially for brokers to get later life lending qualifications.
“By brokers going down the route of qualifying themselves for the later life lending market in particular, they can then offer the full suite of advice themselves. Failing that, there are relationships that they can build with either equity release advisers themselves or packages or master brokers that do have later life lending facilities available, because then they can have a look at the later life option, and if a standard mortgage is better, they can then pass you back to the original adviser.
“Rather than innovating products, per se, I think as an industry, we should try and get more people qualified on the later life side of things, just then they can make that full decision themselves and will help their clients,” he said.
