Rising house prices, low long-term interest rates, and an ageing population that is asset rich but cash poor is pushing equity release into the mainstream as a way for people to unlock wealth and help fund a more comfortable retirement.
However, perceived high rates on equity release plans have put people off this option in the past leading two fifths (40%) of advisers to believe that a reduction in rates to 5% or lower would make a major difference to demand for plans among clients.
The potential growth in equity release is convincing advisers to focus on the market, with 32% believing that pension freedoms will lead to an increase in advisers taking qualifications in equity release advice.
To expand choice and flexibility for equity release customers and advisers, more 2 life have launched a Tailored Choice Plan providing personalised plans and rates.
The lender has a simplified underwriting process to ensure advisers can receive quick decisions on whether clients qualify for enhanced loan-to-values on health grounds potentially worth up to 50% of their house value.
For those opting to drawdown cash over time rather than taking a maximum cash sum, the Plan gives them more flexibility and choice over how and when they access their loan.
Tailored Choice also offers a Guaranteed Inheritance Feature as standard for all drawdown customers that ensures a share of the property value can be passed on to beneficiaries when clients die or go into long-term care.
more 2 life believes Tailored Choice will substantially increase the use of enhanced plans which currently account for around 13% of the booming equity release market which hit an all-time high of £1.38 billion lent on more than 21,000 plans in 2014.
Dave Harris, managing director at more 2 life, said:
“Advisers feel there is a need for them to get clued up on the equity release market as they recognise it will play a huge role in helping them advise their clients on the best options for retirement.
“With equity release rates at their lowest in ten years and the long term trend for rates continuing to go down, we expect the market to continue to expand. We want to create new and innovative products that make equity release a proposition impossible to ignore, by driving down rates and offering flexibility and choice.
“People need more flexible options for retirement income and the option of accessing property wealth as the cornerstone of retirement planning will continue to grow.
“However every client is different and they need solutions that can be tailored to meet their individual needs, both now and in the future. This plan allows inheritance planning to be factored in so the property can be utilised to care for loved ones in future.”
