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RIO and equity release hybrid should be developed, advisers say
A product that bridges between a retirement interest-only (RIO) mortgage and equity release is a development advisers would like to see created, research from More 2 Life has found.
The research paper House of the Rising Sum – Exploring equity release opportunities asked advisers what potential product developments they would like to see in the sector.
Some responses said the creation of a RIO that “could metamorphose into equity release at some later stage in retirement if needed” was something that should be considered.
Speaking on a panel at the launch event for the research, Dave Harris (pictured), CEO of More 2 Life agreed as he said: “Equity release at age 55, potentially, is going to have to last for 30 maybe 40 years and that’s a long time.”
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Collaboration needed
John Somerville, head of regulatory relationships at the London Institute of Banking and Finance, said to make something like this happen and reduce silos, the industry needed to work together more to get a firm understanding of all that was on offer.
“We need more of a collaborative approach and get people to look at it as a whole later life lending piece,” he added.
Other product suggestions
Other ideas for product developments which were mentioned in the survey included a bundled equity release and whole of life insurance policy which generated proceeds at death to meet any outstanding costs such as funeral or property maintenance.
Advisers also proposed lenders explore how equity release could potentially be used for planning and tax mitigation for clients with buy-to-let portfolios.