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Equity release advisers call for solutions for interest-only clients

  • 29/10/2015
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Equity release advisers call for solutions for interest-only clients
One in three advisers would like to see further product innovation for customers struggling to pay off interest-only mortgages, a survey conducted by Bower Retirement Services shows.

The research found that 15% of advisers have witnessed a substantial rise in customer enquiries about help with interest-only mortgages.

Respondents estimated that an average of 25% of their clients aged over 55 have outstanding interest-only deals in place, compared with 30% who still have mortgages to pay off.

Customers have also expressed a strong interest in downsizing to their advisers, with intermediaries saying that a quarter of clients have made queries about this in the past year.

Bernie Hickman, managing director, Individual Retirement at Legal & General, said the market needed to create products that allowed borrowers to stay in their home into retirement.

“…This is a good example of where market dynamics are likely to drive increased product innovation to meet consumer demand. This market is not currently well served by the mainstream mortgage market and it is an area we are interested to explore,” he said.

In the Financial Ombudsman’s 2014/15 review published in May, the dispute settlement service noted a surge in complaints from customers about interest-only mortgages. According to the review, a number of interest-only customers questioned the advice they were given when taking out the loan, as they were concerned they would be unable to repay the mortgage.

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