The truth is that equity release describes a number of very versatile products, and many different kinds of customer can access them. At Bower Retirement, we serve a broad cross section of homeowners who come from all walks of life, from many different parts of the country and whose ages often vary by 30 years or more. It is wrong to pigeonhole equity release as only for people who are in financial dire straits, as the pool of customers is extremely varied. For many of our customers in the equity release industry, later life is expected to be a time of leisure not stress, and we have often helped clients release money from their properties to fund this leisure time. From world cruises to golfing holidays, home improvements to canal boat buying, equity release can be used to fulfil lifelong dreams. Although the lifetime mortgage is certainly not the right fit for everyone, there is a significant and diverse minority of homeowners who can benefit from converting their housing wealth. This conversion is very often motivated by leisure, fun and relaxation, and financial desperation is often the last thing on our client’s minds as they convert their housing wealth into tangible, real-world and often life enhancing experiences. But clearly this has to be done responsibly and with the customer having a clear understanding of the risks as well as the benefits of equity release.
What’s more, for most homeowners in the UK their home has been their biggest and wisest investment. If we consider the impact house price inflation has had nationwide, we can see that many more homeowners than ever before have become asset rich. In London, for example, the growth in housing prices has been, as we all know, extreme. Many prospective clients who come to us have lived in their homes for upwards of 30 or 40 years, and with many of them now living in some of the most desirable areas of our nation’s capital, their homes can easily fetch six-figure sums. Without any real financial clairvoyance, many equity release clients find themselves as millionaires (in terms of their assets) by simply living in the right post code. However, these same ‘millionaires’ can often struggle to access their money for even the most simple of purchases - they are the archetypal ‘asset rich, cash poor’ client. As a result, many are turning to equity release to help them tap into their historic house price gains whilst ensuring they don’t have to leave the home they love (and why wouldn't they love it? It’s been a very wise investment).
The lifetime mortgage can truly help the growing number of homeowners who have seen their property accelerate in value over recent years. Incomes have not kept the pace and so products under the equity release umbrella have become more appealing. Equity release can help such a diverse range of clients that Bower Retirement has launched its first dedicated division - Bower Private Clients - to assist those customers who are of high net worth status, but want to access their housing wealth to complement their retirement plans. Some 36,000 homes were bought for £1 million-plus in the past 5 years, and for some of these homeowners the lifetime mortgage will assist them with the later life plans.
Because of the far-reaching uses of equity release, and the fact that it can help such a broad cross-section of society, the increasing need for various forms of lending in retirement will soon be seen as an essential consideration for everyone approaching retirement. With the seemingly unstoppable rise of house price inflation, coupled with the fact that we are all living longer, as well as the struggles the over 65s are facing securing finance in the mainstream mortgage market, the only way is up for lending solutions in retirement. It’s now down to the media, the Government and advisers currently practising outside our industry to start believing in equity release along with regulatory changes to help increase the number of choices available to the retired market but with safety remaining paramount.
