Advice need no longer be limited to lifetime deals


Since Norwich Union showed the way to other large providers by launching a home reversion product earlier this year, the market has watched with interest but has still not seen any further major developments in this sector of the equity release market.

Products and processes among reversion providers tend to move much more slowly than in lifetime mortgages. It is therefore refreshing to see one provider has now strengthened its proposition in this market.

The enhancements to Bridgewater’s product broadly see the application process becoming much more streamlined which helps meet the demands equity release customers place on providers with regard to time-scale and quality of service. These are high on their agendas.

Bridgewater also provides enhancements to the reversion rates offered which will no doubt be watched closely by competitors over the coming months.

The product features can be summarised as follows (different options are available are depending on which plan versions are selected):

lMaximum percentage sold is 100% and minimum, the lower of 25,000 or 25% of property value.

lGuaranteed further advances where used less than 100% at outset, based on the original valuation of the property.

lEscalating releases – the customer decides on an initial amount and decides at the outset to release further tranches of their property each year. The amounts and period of years are flexible, subject to minimum further releases of 5% of the property value or 5,000, whichever is the lower.

These escalate at 5% per year.

The advantage of this option is that, in the event of death, any un-drawn proportion of the property will remain for the estate.

lHigh house price inflation guarantee.

lEarly vacancy guarantee.

For the first time the product offers a real alternative to drawdown lifetime mortgages.

The lasting and positive mark these developments will leave on the market is that they place the home reversion scheme on a more level playing field with the lifetime mortgage.

As I wrote earlier this year, under MCOB rules even if an adviser does not advise on home reversion schemes, these still have to be considered along-side lifetime mortgage generically for the purposes of establishing that a lifetime mortgage is the most suitable option.

The gap between home reversions and lifetime mortgages has been narrowed by Bridgewater’s innovation.

This is yet more evidence that limiting your advice to lifetime.