The number of people entering retirement while still repaying a mortgage has increased dramatically in recent years, but of particular concern is the percentage of these individuals with interest-only mortgages who aren’t even repaying any of the debt they owe.
With some older homeowners facing this plight struggling to even service the interest element of their loan as their income reduces in retirement, Bridgewater say repaying the capital is proving increasingly difficult for many.
To aid understanding of how equity release can generate sufficient funds to repay an interest-only mortgage, Bridgewater has published a new ‘Just a thought...’ sales aid for advisers to give to their professional introducers.
The aid includes a case study of a customer who bought a house using an interest-only mortgage, but the loan wasn’t due to finish until she turned 90. After finding it difficult to make her monthly repayments and having concerns about how she would pay the capital back, she contacted an equity release adviser who was able to successfully arrange a home reversion plan.
Bridgewater’s ‘Just a thought...’ sales aids are designed to be used by advisers with their introducer contacts to help them understand the potential uses of equity release in a variety of situations and circumstances.
Chris Prior, Manager Sales and Distribution at Bridgewater Equity Release, commented:
“Despite the fact that equity release can be used to generate funds for a number of different uses, many introducers are not particularly adept at identifying all the various scenarios where it may represent a solution. The motivation behind these sales aids is to help introducers recognise such situations so they are able to put older homeowners in need of assistance in touch with a specialist equity release adviser. It may not be the most suitable option in all instances, but it is important that equity release is at least considered as a possibility.
“Most of us hope to have repaid our mortgage in full by the time we retire, but the reality is that an increasing number of individuals aren’t able to fulfil this ambition. This means they are still saddled with debts into retirement at a time when their income is likely to be reducing. It is bad enough for borrowers on capital-repayment mortgages, but for those on interest-only home loans who aren’t chipping away at the amount they owe, this problem is exacerbated. Releasing equity from the property can alleviate this stress by providing the funds to repay one’s mortgage, but a number of homeowners wouldn’t even realise this was an option. It is down to us as an industry to increase awareness of this potential solution and by educating introducers we are aiming to raise awareness around the usefulness of equity release in such scenarios.”
