"This research shows there is a lot of misunderstanding in the later life lending market, and demonstrates the value of taking financial advice."
Advisers reported that even when clients had an understanding of the later life financial options available, the majority of them misunderstood products, such as annuities, pensions and equity release.
When discussing equity release, advisers reported that 71% of clients thought they could end up in negative equity, two thirds (66%) thought they couldn’t sell their home, 62% thought they couldn’t make payments to reduce the size of their loan, 51% thought they couldn’t pay off a lifetime mortgage early or move it to a new property, and 44% thought they couldn’t switch lifetime mortgage provider.
This confusion about of the financial options available in later life is coupled with a lack of understanding of their own personal situation, as advisers also said that nearly half (47%) of their clients don’t know how much they have in their pension pot.
Despite their property most likely to be their biggest financial asset, advisers say 40% of their clients don’t initially consider their home as a financial asset to use in retirement.
When asked what the top concerns advisers say retirees face, their top worry is funding longer retirements, followed by mortgages continuing into retirement and finances becoming more stretched as younger generations need more help.
Nici Audhlam-Gardiner, managing director of lifetime mortgages at OneFamily, commented: “This research shows there is a lot of misunderstanding in the later life lending market, and demonstrates the value of taking financial advice. OneFamily supports advisers in helping customers identify the right solution for funding their retirement, with a broad range of lifetime mortgage products and payment options.
“As the lifetime mortgage market continues to grow, so will the variety of homeowners and their needs. As providers and advisers, we play a vital role in helping over 55s get a complete picture of their retirement funding options.”
