Live in the here and now
David Jones is director of Click2Check
The later life lending space is likely to figure largely for the advice profession for many years to come, as there is inevitably a growing demand for later life lending products with homeowners increasingly willing to utilise their home as the property asset it is.
I think we would all agree that we have moved on apace from the days of the ‘home is my castle’ attitude, only to be passed down to future generations through inheritance, with no thought of accessing its value until the homeowner(s) had passed away.
One thing the pandemic might have taught many people is the need to live in the here and now.
Why, for example, wouldn’t you support your offspring now if you were able to, rather than saying to them, “You’ll get it all when I’m dead.”
‘It’ might be completely irrelevant then, when right now it can do so much. This, of course, isn’t just about helping out or gifting, but it’s also very much to do with the homeowners giving themselves a better life, perhaps utilising the value to pay off debts, increase retirement income, cover long-term care needs, etcetera.
As has been said many times before, what is the point in living in a house worth hundreds of thousands of pounds and feeling you can’t put the heating on?
This growing interest has been evident for a number of years, but again the pandemic could act as a significant catalyst, and it’s therefore not surprising that more mortgage advisers are looking at their options in the later life space, whether via their existing permissions, adding equity release to theirs, or looking to partner with a specialist.
Let’s be clear however that these can be complex scenarios, tied up with complex financial situations.
For instance, one of the key parts of the later life advice process is understanding the client’s situation with regard to benefit entitlement.
The last thing you want to do as an adviser is either be unaware of their entitlement, or to negatively impact upon it, especially in a means-tested world where releasing equity could harm the money they receive.
There is, of course, specific software advisers can utilise in order to check this, while having that clear line of sight in terms of a client’s credit file and banking situation will also work in giving the adviser a head’s up around benefit access.
Bringing all these different parts of the client’s financial assessment together – and early in the process – will allow advisers to have a much clearer and rounded view about the potential product options that are available to those later life clients.
This is particularly relevant in a marketplace which has seen the product options available for later life homeowners significantly increase in recent years.
Where once, it was the case that equity release stood somewhat alone in this space and it was rather inflexible, now we have a situation where borrowers could access a variety of different lending solutions.
They might be able to go down the RIO route, or continue with a mainstream mortgage with a higher maximum borrower age, or they could go equity release but with much more flexible drawdown options, or the adviser might also be able to chart a pathway which takes them through their current mainstream mortgage product to RIO and then on to equity release.
Let’s just say that there are more options, more product choices within those options, and more flexible criteria that can be accessed than ever before.
As mentioned though, the important initial point is to have absolute clarity around the client’s finances, and this is clearly where a product like Credit Assess can help, as it gives the adviser – with the client’s consent – exactly that.
It’s also important to understand here that a client interview ‘deep dive’ into the finances might illicit some of the detail, but not all of it.
Some clients – whether in later life or otherwise – might simply not know what they do or don’t have, or what they’re entitled to.
That is absolutely natural but, as an adviser, you don’t want to spend weeks having to unearth the minutiae of their financial details and history, potentially as it comes to them.
Far better to get that detail upfront and work from a position of strength. The client will appreciate it, and so over the course of the relationship, will you.