The sales aid analyses the different outcomes when a typical male 70-year old client, with a property valued at £200k, chooses either a Bridgewater home reversion or a lifetime mortgage product.
If the client is looking to release £34k he would be able to guarantee 63% of his home’s equity by opting for a home reversion as compared to just 50% with a lifetime mortgage. This is due to the fact that releasing 17% of his equity with a reversion requires 37% of the total equity with a home reversion plan and 50% with a lifetime mortgage.
Bridgewater is also asking advisers to consider future changes in a client’s circumstances and any need they might have to release further funds. The size of any lifetime mortgage equity guarantee could be greatly reduced whereas with a home reversion whatever percentage equity is left is guaranteed for further release.
Additionally, Bridgewater guarantees to offer further release until 100% of the equity is used.
This sales aid is the latest in a series offered by Bridgewater Equity Release to specialist advisers active in the equity release market.
Peter Welch, head of sales and distribution at Bridgewater Equity Release, commented: “Many clients who wish to release equity from their properties also want to ensure they have a percentage of that equity guaranteed as an inheritance after they take out an equity release product.
“This sales aid has been designed to show advisers and their clients the benefits of a reversion plan when inheritance equity guarantee is one of the non-negotiables for the client.
“We wanted to show that lifetime mortgages may not offer some of the guarantees the client is looking for, given that the roll-up of interest and the size of the debt compared to the value of the home are likely to vary significantly as the years pass. However, with a reversion the equity remaining is guaranteed as is the fact that customers can come back at a later date and take further releases up until 100% of the available equity is used.
“This is simply not the case with a lifetime mortgage and indeed with these products the ability to guarantee equity levels can be greatly affected.
“Bridgewater is committed to providing a range of sales aids for our advisers and all documentation can be accessed from our website.”