News Review: Equity Release
Reasons to be cheerful
Never know what the next client will want?
by Andrea Rozario, director general of SHIP
We are now on the countdown to the festive season and I am sure that everyone is either experiencing the mild panic which comes from an overcommitted diary or the worry of meeting
end of year targets. The equity release market – as I highlighted in our
last article - saw a much improved third quarter and while the fourth quarter is generally slightly slower due to the holidays, we do expect to see progress in this quarter as well. The suggestion that the market is returning to more normal trading conditions is backed up by sales fi gures released by Key Retirement Solutions in October. A further example of growth prospects for this market
is the fact that the national network Tenet Lime recently added two equity release lenders to its panel – More2Life and Newlife – Home Related Finance. This move was as a reaction to “increased interest in equity release” and will help to widen the amount of products available via this award winning adviser support group.
Obvious choice As we all know, there are a variety of different reasons that people take equity release – whether it is to repay debts, improve their standard of living or to make long-held dreams come true. One of the other reasons that people often use equity release is to help their family and new research from ERSA suggests that six out of ten adults would be happy to act as a guarantor for a member of their family’s mortgage – if they had the capital. Equity release is also an obvious choice for helping to pay
for care and recent research produced by SHIP highlights how vital this type of funding will be for certain people. Currently a typical stay of two years in a care home will cost £51,906 but over this period the typical over-55 will only receive £27,796 in income. Thus, they will be forced to use their savings (£10,468) but even if they do they will still face a short-fall of £13,642 – even without factoring in costs such as clothing and toiletries. Now I hear you argue that the value of a home is not taken
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14 MORTGAGE INTRODUCER DECEMBER 2011
into account when their assets are reviewed for potential long term care funding if they have a partner or dependent living in the property and this is – of course –completely correct. But often the costs of the care can be more than that offered by the state which can leave the individual and family with little choice of who provides the care but the extra costs could possibly be met by equity release which can lead to a happier outcome for all concerned.
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