The UK financial services industry is nothing if not innovative. So it’s somewhat surprising that progress in one area of the market can take such a long time to catch on elsewhere.
Take enhanced equity release. Innovation along these lines first appeared in the annuity market in the 1990s with the introduction of smoker annuities, offering smokers higher rates of income because of their reduced life expectancy. Enhanced annuities then grew into the booming market it is today.
But it wasn’t until June 2010 that we became the first equity release lender to pioneer a similar concept for lifetime mortgages.
Lifestyle issues, through to more serious medical issues such as angina and cancer, can all qualify a client for a significantly higher LTV than a standard lifetime mortgage.
Although as many as 1 in four customers could qualify for enhanced terms on their loan, many miss out on the chance to release more of their housing wealth because they are simply not asked the right health questions.
The more detail you can get from a client, the better. From a short medical questionnaire with nothing more than a handful of yes or no questions you capture enough to determine qualification and calculate the enhanced LTV.
We believe that enhanced equity release is something more clients should be offered as part of a holistic retirement financial plan. That is why advice is crucial and experienced, expert advisers are playing a major role in driving growth in the equity release market.