Rob Kingsbury spoke to Dave Harris, CEO of equity release provider more2life about changes in the equity release market and what paraplanners need to know when researching products
PP: What’s the background and raison d’être of more2life as a company?
DH: more2life is the youngest of the top three lenders having been launched just over a decade ago but from day one, we had big ambitions. Our raison d’être is to challenge the status quo by designing lifetime mortgages focussed on customer needs while at the same time supporting advisers in their mission to help improve the retirement and later life outcomes for their clients.
From a business that started with one product and one funder in 2008, more2life now has more than 80 products and variations across five funding partners who support the continued development of later life lending products. Looking to the future, we want to build on this legacy by producing a diverse and constantly growing product range, creating products to suit the evolving needs of customers as well as improving the equity release process by investing in the latest technology and developing market leading systems.
The advances in technology combined with innovative new products, will make things easier for both advisers and clients from initial appointment right through to application and onto completion. This will ultimately benefit the client who will receive a smooth streamlined process as well as the choice of a variety of products with different features to suit their needs.
PP: There appears to be greater interest in equity release these days. What, if anything, has changed in the market?
DH: Over the last five years there has been a significant growth in the market, the over 55s now make up a larger proportion of the population than ever but they also are carrying more financial burdens past traditional retirement age, something which is a relatively new societal trend.
Indeed, we are seeing people who not only have poor pension savings but might also have unsecure or secure debt – possibly even an interest-only mortgage with no repayment vehicle. There is also an increasing number of parents and grandparents who are interested in gifting an early inheritance to help fund younger generations onto the property ladder.
Additionally, the industry has also changed significantly in that same time period. There are more products than ever available on the market (over 300) and many have flexible features – such as higher LTVs, low interest rates, capital and interest repayment options and downsizing protection.
With more people starting to take a holistic look at retirement planning, releasing equity from a property can be a way for them to improve their finances, particularly if someone finds out that their finances are not as healthy when heading towards retirement as they expected.
PP: Generally, what are the reasons and in what ways are homeowners using equity release?
DH: Equity release is not a single use product, customers use equity release for multiple reasons and have a more holistic approach to how they may need to use funds in the future. They tend to fall into three categories – need, want and planning. Some people need to improve their retirement income or repay borrowing while others want to age proof the family home or go on holiday. Others plan to help first time buyers onto the property ladder or pay for their child’s wedding. It is a multi-use product.
According to Key’s latest Market Monitor almost half of customers use equity release to clear some form of debt, along with other reasons – 29% pay credit cards or loans and 20% to clear outstanding mortgages. While naturally people need to think before swapping one form of borrowing for the other, good equity release advisers will help them consider all their options and with voluntary partial repayment options now available on many plans, clients can continue to service their debt if they wish to but without the worry of defaulting or repossession. Used properly equity release can provide a vital lifeline for people who face losing their home due to an outstanding interest-only mortgage or surviving on very little as they try but often fail to service mounting debit card debts.
PP: Given the UK’s aging demographic do you see equity release becoming more popular?
DH: The UK’s population is aging, this combined with continued product development within the later life lending market and shrinking pension pots, I do believe equity release will continue to be popular and will increase in popularity in the coming years. The over 55s are the largest demographic in the UK and for some equity release may be the way forward to enjoy the type of retirement they hoped for.
PP: What do paraplanners need to be aware of when researching equity release products?
DH: Paraplanners are vitally important for the industry – they allow advisers to do what they do well and really support their clients. I might start by encouraging paraplanners to ensure that housing equity is included within the discussions that advisers have with their clients. If someone is essentially living in their largest asset, it makes sense to include this within wider financial planning discussions.
I would also say that the equity release market is changing rapidly and products are more flexible than ever before so paraplanners need to find time to understand what features are available and how they might help their clients. Modern equity release products including the opportunity to make interest and capital payments in certain circumstances, could certainly be compared to some of the retirement interest-only mortgages on the market.
Fundamentally paraplanners need to be aware that as a market we have evolved and we are very keen to engage.
PP: What learning resources do you have for paraplanners/advisers and the clients?
DH: We have recently launched a new website which includes our ‘Learning Lab’ where advisers can find a variety of support tools, guides and CII accredited webinars. We have also recently launched our Lending Criteria Tool which helps paraplanners easily identify which products might be the best option for clients, depending on their individual needs and requirements.
There are also four calculators on the website (lending criteria, inheritance protection, loan to value and partial repayment calculators) to help advisers explain these features to their clients. They were also created with the client in mind to help illustrate the different features in a more user-friendly way. Finally, we also regularly host and attend industry events and seminars across the UK so if you are out and about, please do come and speak to us.
PP: How can you make paraplanners lives easier when their clients want to explore equity release as an option?
DH: We have a team of over 40 case handlers, underwriters and support staff. Once an equity release application has begun you will be assigned a dedicated case handler who is on hand to answer any queries and to provide updates with the progression of the application. Our website includes our Learning Lab which has a range of supporting documents and guides along with informative webinars. Our team regularly attend and host events across the UK including workshops to help advisers better serve their clients.
Recently, more2life has launched its service promise, whereby we will compensate customers £500 if it takes more than 14 working days to issue a loan offer from the date of application via our fastpath portal. The development of cutting-edge, industry leading technology is at the top of the agenda when it comes to adviser support.
