Statistics from The Equity Release Council showed average lending overall at £72,217 in the last quarter of 2017, with more than £3bn worth of equity released by older homeowners last year. If you are a couple looking for equity release and only one of you is over the minimum age, you could still get an equity release product, but the younger partner would need to be removed from the deeds. Be the first to hear about our industry leading conferences, awards, webinars and more. Equity release is a means of retaining use of a house or other object which has capital value, while also obtaining a lump sum or a steady stream of income, using the value of the house.. © The Financial Times Ltd 2020 "FT", "Financial Times" and "FTAdviser" are trademarks of The Financial Times Limited and their associated companies. While the minimum age for equity release is 55; it is possible for one person on a joint mortgage to be under 55 provided their share of equity in the property is transferred to the person over 55. Can equity release help to fix the care crisis. You can do this via a number of policies which let you access – or 'release' – the equity (cash) tied up in your home, if you're 55+. Alice Watson, head of marketing, insurance at Canada Life, said: “Advisers are clearly anticipating a growth in demand driven by both improved awareness of equity release and families reassessing their finances in light of the pandemic. If a younger family member or friend moves in to provide companionship or care, they Data from the second charge sector also revealed changes, which point to a worsening arrears picture. While typically the minimum eligible age for equity release is 55, applied to the youngest application for joint equity release mortgages, this can vary from lender to lender so is often higher. Average age of equity release borrowers expected to fall . Typically, it is driven by the need to repay debt, increase retirement income or gift to family with the residual amount being used to meet more aspirational needs such as holidays. The firm says that the new system is designed for mortgage intermediaries. The Financial Times and its journalism are subject to a self-regulation regime under the FT Editorial Code of Practice: www.ft.com/editorialcode. Members of Brilliant Solutions will now be able to search for almost 100,000 different criteria from over 200 lenders through Knowledge Bank. Broker searches for the minimum age at which lenders would allow equity release surged in February, hinting at demand from younger clients. If two people take out an equity release product, the age of the younger partner will be used. “The world is changing around us, but closer to home we need to consider how best to use our overall wealth to provide the secure financial futures we seek. Our website uses cookies to improve your user experience. The younger the borrower when they take out the equity-release plan, the higher the costs are likely to be. Almost three-quarters of advisers expect the value of the equity release market to grow next year driven by younger customers and an appetite … “The extent and speed of change in the criteria needs of borrowers from month to month shows just how essential it is for brokers and lenders to adapt to changing demands.”, Knowledge Bank has appointed Andy Leadbetter as a business development manager. Many young people have lost jobs or seen their incomes fall as a result of the coronavirus crisis and have relied on parents and grandparents to help them stay afloat. How has lending on equity release changed? In the residential sector, the ongoing demand from brokers was information on lenders offering the maximum age at the end of the mortgage term. Equity release advisers expect younger clients and bigger loans in 2020. A greater number of borrowers below 65 are taking out equity release products, a new report has shown. Retirement plans in jeopardy: equity release could be blocked if house prices crash Have your say Weirdly, though, Aviva offers equity release loans to people as young as 55. No part of this publication may be reproduced or used in any form without prior permission in writing from the editor. However, a survey by equity release lender Canada Life found that nearly 40 % of advisers expect the average ages of borrowers to come down in 2020.. You don’t need to have fully paid off your mortgage to do this. Plan providers usually require homeowners to be at least 55 before they will lend to them. If you continue browsing, we assume that you consent to our use of, Rise in interest-only searches: Knowledge Bank, Brilliant Solutions partners with Knowledge Bank. Leadbetter has over 30 years’ experience in the insurance and mortgage industry. Share Tweet Share. Later Life Regular repayments attracting younger equity release applicants. Advisers are best placed to show clients how to plan for that future.”. Equity release plans run until the money is repaid, or until the last borrower moves into permanent long-term care or dies. Equity release might seem like a good option if you … Not something we often consider while leading our busy lives, but our home is … Equity release is a way to access this value without having to move home or downsize - and the most popular way to do this is through a lifetime mortgage. “Predictions around a shift in customer age and increase in loan size, point to a move in how homeowners view their home as a financial asset much like pensions or Isas. All rights reserved. A November survey of 134 advisers qualified to sell equity release found 57 per cent thought the average customer age would get younger. Things you need to know about equity release. Younger borrowers look to equity release. The average age of new equity release customers in the first half of last year was 70 for new drawdown plans and 68 for new lump sum plans. Your tax-free money is yours to spend as you wish, either as a lump sum or a series of drawdowns . Registered in England and Wales with number 06439194, Registered office at 7th Floor, Vantage London, Great West Road, Brentford, England, TW8 9AG, News & analysis delivered directly to your inbox Equity release allows homeowners aged 55 and over to use the equity (money) tied up in their homes to assist with income or capital needs. What is equity release? There are two main types. On a lifetime mortgage the maximum loan is usually around 50% of property value, but younger borrowers are likely to be capped well below that. Andy Wilson, equity release specialist at Andy Wilson Financial Services, an advice firm, said: At the ages of 62 and 58, Mr and Mrs Truelove are very young in equity release terms. This is the first time inheritance protection has been among the top five equity release searches on the Knowledge Bank criteria activity tracker. More information can be found in our Privacy Policy. We set up Responsible Equity Release to work with the growing number of people who want to use equity release as a sensible, responsible way to improve their lifestyle. What has changed in the equity release market? A deposit of, at the absolute least, 5% is required and even then the choices of mortgage provider are almost non- existent as 95% mortgages are so scarce. Research and insight Your estate is everything you own, including money, property, possessions and investments. © 2019 Metropolis Group Holdings Limited and / or its subsidiaries and licensors. If you do take one out, you should consider checking to see if you can get a better deal once the early-repayment charge period has ended. Given that the average 55-year-old can expect to live to about 85, the interest will roll up for 30 years. Equity release has come a long way since regulation in 2007, as the UK's 55 + population looks to safely take advantage of their biggest asset to fund their ambitions. Lifetime lease Register today to receive our range of news alerts including daily and weekly briefings. Searches for lenders that allow borrowers with county court judgements registered in the past three years, and those with existing secured loan or mortgage arrears, were among the most popular. Only registered users can post comments. Laura McOscar, a product expert at the insurer Royal London, explains: “Two key differences [compared to equity release] are that younger customers can take out an RIO [there is … to improve your user experience. 0. The most common method of achieving this is through a Lifetime Mortgage. Mortgage rates have come down rather drastically, compared to the early days of equity release, where lenders are now offering long-term interest rates in the region of 2 per cent to 4 per cent. 16/03/2015. Brokers’ clients are continuing to task them to find the maximum LTV permitted in the commercial sector, and also to accept semi-commercial properties. A survey by equity release provider Canada Life revealed that this year almost 40 per cent of advisers said they expected their clients to be younger this year. Sign up today and make your voice heard. By Chloe Cheung More than half of advisers think the average age of equity release customers will decrease alongside predictions of growth in … Please note that for equity release you need to be 55 years of age or over to qualify. Equity Release is a way of getting money from your home to enable you to pay off debts, improve your living conditions, or buy the things you would like; holidays, new car, home repairs, the chance to travel and see relatives. As the voice of the adviser community, our content generates robust debate. But searches for “interest-only” have climbed to second place in the rankings, […], Brilliant Solutions has announced a partnership with Knowledge Bank. Knowledge Bank lender relationship manager Matthew Corker says: “February really threw up some surprising results, most notably in the equity release sector where it was all change. Many young people have seen their income fall as a result of coronavirus By Adam Williams 6 Dec 2020, 5:00am. Michael Lloyd January 7, 2020. Equity release for those aged 55 to 79 is straightforward. The number of equity release borrowers is growing and younger people are looking into this type of mortgages as new regulations are changing the playing field for all. More than half of advisers think the average age of equity release customers will decrease alongside predictions of growth in the market, according to research by Canada Life. The number of equity release borrowers went up by 12 per cent between the first and second half of last year, which was the busiest period for equity release sector since 2008. Since February the most searched-for term among brokers looking at residential criteria has been “maximum age at end of term”. Written by: Adam Williams. OMS managing director Neal Jannels says: “Choosing the right partnerships and integrations are vital when looking to expand […], Ross Jackson, Senior Protection Marketing Manager, Royal London  In July, we piloted sending protection plan statements to a small group of our customers. According to Canada Life’s research, the main drivers of demand for equity release next year include increased awareness and “comfort” with equity release among homeowners (59 per cent), the impact of Covid-19 on family finances (58 per cent) and insufficient pensions savings (50 per cent). With a home reversion plan, the reversion company owns all or a part-share of your home. Take part in and see the results of Mortgage Strategy's flagship investigations into industry trends. Simply put, equity release offers homeowners that are over 55 a way to financially support themselves (or their loved ones) by accessing some of the value that has built up in their homes over the years. It hasn’t been in the top five searches since November 2019 and so may be a sub-set of this sector to watch. Mortgage Strategy Events You would tend to find that the companies that deal in equity release plans add an extra percentage point of LTV (loan-to-value) for each year the applicant gets older. What options can borrowers get with drawdown products? Those at the younger end of the scale are aware that record-low interest rates make equity release a more viable solution than ever before. In his new role, Leadbetter will manage key relationships with brokerages and packagers who […], A growing number of brokers are seeking interest-only options on behalf of their clients, the November criteria activity tracker from Knowledge Bank reveals. Because of this lack of communication, do consumers […], News and expert analysis straight to your inbox. Saving up for a deposit on a first home is a struggle. Figures from the Equity Release Council for Q3 2020 showed the market was beginning to show signs of recovery after lockdown, although activity was still down year-on-year. Brilliant Group managing director Matthew Arena says: “The partnership between Brilliant Solutions and Knowledge Bank is the next step in providing our brokers with […], One Mortgage System has integrated with Knowledge Bank to combine CRM, criteria search and product sourcing in one login and licence, according to the firm. The key reasons triggering younger borrowers Whilst this in itself is not exactly ground-breaking stuff, as an industry we’re perhaps more used to engaging with advisers than directly with our customers. The enquiry narrowly beat searches for lenders offering an equity release inheritance protection guarantee – to ensure a percentage of a property’s value is passed onto loved ones when the owner dies and their home is sold. Equity release customers can use their tax-free cash however they choose, so there is often a variety of reasons why people decide to unlock their property wealth. The average age of a new drawdown lifetime mortgage customer was 69.8 in the first half of 2020 according to the Equity Release Council, while the average age of a new lump sum lifetime mortgage customer was 68.5. Aged between 70 and 84, some restrictions could apply. While typically the minimum eligible age for equity release is 55, applied to the youngest application for joint equity release mortgages, this can vary from lender to lender so is often higher. If you are under 55 and want to release equity then you may wish to consider a second charge loan or a remortgage on your existing property. Almost two in five (38%) financial advisers expect their clients to be younger in age, whilst more than one in five (21%) expect the size of … He has previously worked at Uinsure, Bupa, CVS Ltd, Tenet Group and RBS, in a variety of roles. The location of your home is a factor. Equity release schemes are designed to be a lifelong commitment, so, if you change your mind, need to move house or want your equity for something else later, you could find yourself seriously restricted. Buy-to-let enquiries suggested a more positive shift; a new addition to the most popular searches was for first time buyers, a sign borrowers are still interested in the market as an investment opportunity. Email us on [email protected] to let us know. While the survey also found four in 10 advisers (42 per cent) saw growth in their equity release book during 2020, 62 per cent expected the market to return to pre-Covid levels by the second quarter of next year. The younger you are, the less you can expect to have released in an equity release scheme. If you continue browsing, we assume that you consent to our use of cookies. Enquires about joint borrowers for a sole proprietor, and income multiples for affordability, were also up. Over the last four years, there has been a 330% growth in the number of 55 year-olds seeking advice. Equity release is, in a nutshell, a way to unlock the value of your property and turn it into a cash lump sum. The "catch" is that the income-provider must be repaid at a later stage, usually when the homeowner dies. The tracker reveals brokers’ activity in trying to meet the loan aspirations of their clients, showing the cases brokers are trying to place. Most lenders will have a minimum age policy and although this will vary, in general most providers require their borrowers to be no younger than 55-60. Due to the very nature of an equity release plan, financial advisers will recommend that they are only suitable for the retired or elderly people. What do you think about the issues raised by this story? Equity release reduces the value of your estate and the amount that will go to the people named as beneficiaries in your will. 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