This week, it’s Andy Wilson commentating under the story FCA raises alarm over ‘younger’ equity release borrowers
As an active equity release adviser I do sometimes wonder if the minimum age on all plans that have the potential to roll-up the interest should be no earlier than 60.
A 55 year old taking out a plan could easily see rates at around six per cent given they cannot borrow a significant proportion of the property value and may tend to borrow the maximum allowable for their age.
This rate will double a debt in only 11½ years – so if they live to age 90, an initial debt will have doubled three times – thus even borrowing £40,000 could be £320,000 some 35 years later.
I do not see a lot of clients between the ages of 55 and 60 who desperately need equity release in such a way they cannot service at least part of the interest on the loan.
Those that do receive a very thorough warning [on] how the debt could increase and impact on later life.