Mortgage advisers are failing to grasp the opportunities presented by later life mortgage lending, says Will Hale, CEO of Key Advice & Air.
Data from UK Finance on later life lending showed the number of new loans advanced to older borrowers increased 18.4% year on year in the third quarter.
The trade body said a total of 39,950 new loans were taken out, while the value of lending increased 24.7% to £6.5 billion compared with the same quarter a year earlier.
There were 6,040 new lifetime mortgages advanced in the third quarter, up 3.4% year on year and 335 retirement interest only mortgages, up 11.7% year on year.
However, Hale said that while on the face of it, the increase looks impressive, the devil is in the detail.
“The later life lending market is growing strongly and represents a major opportunity for all advisers but the concern is that mainstream brokers are not aware of all the options now available and their customers are not always receiving the most suitable outcomes.
“Later life lending products, including lifetime mortgages, have evolved to provide flexibility around income and capital needs and are relevant to all homeowners over 55. Specialist equity release advisers are adapting their processes to ensure a holistic perspective but a more sophisticated approach to affordability in this sector is needed from all advisers.”
For all borrowers over the age of 55, assessing income and expenditure is required not just to determine product eligibility but to understand the optimal repayment amount and how these payments may be best phased, balancing cost of borrowing and lifestyle objectives, said Hale.
Modern lifetime mortgages include options where interest can be served in full or in part, paid monthly or through ad hoc repayments and where the interest rate applied can vary according to payment amount and term.
He explained: “This can be a complex area for those not regularly advising in this market but support is available. What is clear from the data is that the customer need in this area is growing and mortgage advisers – and wealth advisers as well – need to ensure they are either equipped to advise on all later life lending options or have referral relationships in place with trusted specialists.”
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