Speaking to this publication, Paul Saroya (pictured), director of Viva Retirement, which has won nine years in a row at The Equity Release Awards, said: “Unfortunately, if the two words equity release are mentioned to people, it brings up connotations of 10-20 years ago but, actually, it’s really evolved.
“Back then it was so inflexible for clients, they couldn’t have a drawdown and there were only one or two lenders in the [later life lending] market. Now, 10 years on, the competition in the [later life lending] market has driven a lot of flexibility, which has improved things for clients.”
Saroya said that change had been driven by lenders as opposed to regulatory intervention, as having “more funders in the [later life lending] market has driven up competition organically, so innovation has had to keep improving, so the lenders are fighting each other to get a bit better”.
“One of those ways is to reduce interest rates or make it more competitive and the other is to have more options available for clients on the innovation front,” he said.
Regarding current innovation in the later life lending market, he said it was “good to see the gap starting to be filled between conventional mortgages and lifetime mortgages”, so there were more options in the retirement interest-only (RIO) space, such as hybrid lifetime mortgages. This was allowing the firm to help more customers who are in that in-between space.
‘Cautious optimism’ in later life lending sector in 2024
Saroya said that there was more “cautious optimism” in the later life lending market, even compared to six months ago, but a lot of confidence “hangs on things outside of our control” like the war in Ukraine, making external factors the biggest challenge this year.
He noted that lenders had started the year with a “bit more appetite for loan to values (LTVs), so that’s really good, and interest rates have been very competitive at the lowest end, so those things have really helped us”.
Saroya continued: “I think the type of client is also changing, so there’s a lot of talk about making sure that the company that you’re dealing with is also offering you either a referral or direct advice on things like RIOs and conventional mortgages.
“I think that’s important to have all of that at your disposal as a company, because we are seeing more people who have just finished a mortgage or want to end the conventional mortgage and could potentially carry on with a similar product like an RIO. I think probably advisers who’ve been in the market a long time are not necessarily offering all of those options.”
Saroya continued that in the last year nearly all cases had some “issues with property boundaries or property eligibility”.
He added that, when customers came to look for a deal, and a conventional mortgage may not be able to help, there were a lot of people where “the LTV isn’t quite there”.
However, Saroya said that it was important that, if there were people that it couldn’t assist currently, to “keep that dialogue and relationship open” so it can help them in the future.
This, in turn, can lead to more repeat and referral business because you have “built that relationship, so then they’re willing then to refer you on to friends and family”.
“They’re willing to do that because they know when the time is right, they’ve got somewhere to go and someone to help them,” he said.
Saroya said that, following the Financial Conduct Authority (FCA) review and Consumer Duty, it was “seeing a real step-change from lenders”.
“This is really good, because the lenders are the ones to hold the information on the client. For many years, we’ve been asking all lenders to let us know, for example, when significant life events happen, because as brokers we won’t necessarily know.
“That’s really important to us, because then we can then get in touch with the clients and make sure they know their options at that time, and if they need advice, we’re there to help them. That is changing and Consumer Duty is definitely helping get a better result for clients overall,” he said.
‘Core motto’ is ‘treat people as if we’re treating our own family or clients’
Viva Retirement has grown from two to 17 advisers, with Saroya saying it had built the firm “very slowly but steadily”.
He said that it was getting a lot of approaches from people interested in joining, but the main focus was on quality and ensuring its current staff are happy.
When asked why there had been an uptick in interest, Saroya pointed to volatility in the last year and the fact that “companies are either scaling back or just no longer here”.
Saroya said that the “priorities for the business are to carry on what we’re doing, so being the business for the long term”.
He added that as a firm it wanted to continue helping to “raise standards in the industry”, pointing to its work with the Equity Release Council (ERC) over the year that had led to “great wins for the industry and the client”.
“It’s really important to us that we still influence decision-makers in the industry, and we still try to raise standards,” Saroya said.
“The core motto, which probably sounds a bit cheesy, is to treat people as if we’re treating our own family or clients. It’s making sure that we’re always giving best advice, and it doesn’t matter what that advice is, if the advice is that this isn’t right for you then you can maintain that relationship in case that changes in the future, but to make sure that clients are getting the best advice,” Saroya said.
He said that there was opportunity in the later life lending market, as it was at a “low point” and would start to improve.
“We say to other people that if you can just hang in there because the [later life lending] market will start to improve at some point. So, our main thing is to be there on the cusp of everything as it starts to improve and to increase our share of that,” he said.
Advisers need to upskill in later life or establish referral relationship
He noted that advisers needed to either upskill in later life lending or “have someone who they’re very confident in referring to”.
“It depends on their model, so we have many companies that are very happy to refer [to us] and that’s enough for them,” he said.
Saroya continued: “If people are coming into the [later life lending] market, and there’s no reason why they shouldn’t, but what I would say is that it’s important that they spend the time to make sure that they get fully up to speed with what they’re actually offering.
“I think there’s too many dabblers, so a mortgage adviser where 90 per cent of the work is mortgage and 10 per cent is lifetime mortgage, I’m not sure that that’s giving the lifetime mortgage client the best advice always.”
