Business Development Manager at LV=, Chris Smyth provides an insight into the evolving world of equity release.
Equity release is no longer seen as an option of last resort, which only a handful of advisers consider for their clients, but now forms part of holistic financial advice. Due to the increasing levels of demand for later life products such as lifetime mortgages, here at LV= we are investing time and effort to shape even more flexible underwriting criteria for our products.
We’ve seen a historic rise in customers taking up the scheme, with half year sales of equity release reaching £88m – 66 per cent up from 2017 and in the second half reaching £123m. To keep the momentum, we’ve refreshed our underwriting criteria for our Lifetime Mortgage Lump Sum+ policy, which means that second homes/holiday homes under the policy can be rented out for up to four weeks at a time. We can now also consider second home/holiday home properties that are rented out through services such as Airbnb.
Furthermore, we are now able to accept properties with Laing Easiform wall construction and Wimpey No-Fines construction (subject to satisfactory valuation) and we’ve also increased our maximum flat roof percentage to over 50 per cent (on a case by case basis).
Over the last 12-18 months we have seen an influx of customers leveraging their main residence and second or holiday home in order to achieve their financial objectives. So, by using the equity in both properties, customers are able to release funds for the things that matter in life, such as repaying a mortgage or gifting to family.
Another consideration here is that customers may be less emotionally attached to a second/holiday home than their main residence, feeling more comfortable to have a charge over their second property.
It’s a very exciting time for the equity release market and here at LV= we listen carefully to adviser feedback to help us deliver the right retirement solutions for customers. The underwriting improvements we recently launched are a way of demonstrating our flexible approach to the changing financial needs that may arise in later life and willingness to support financial advisers in their mission to increase their customer’s retirement confidence.
According to a recent study of the later life in the UK ageing population, there are projections that the number of people over 85 will double in the next 23 years. With that in mind, nearly one in five people currently in the UK will live to see their 100th birthday. Therefore, it’s no surprise that more and more customers are considering equity release as a means of funding their retirement shortfall or enjoying their ‘second life’.
This article has been written by Chris Smyth, Business Development Manager at LV=