Recent figures suggest that nearly £1 billion was withdrawn by over-55s through equity release in the first three months of 2019.
With the equity release market “booming” should more advice be given to those looking to release equity from their homes?
Dotty Lewis, private client adviser at City Finance Brokers seems to think so: “With more clients looking to use equity release products for inheritance tax management, to help their families with a deposit or to simply top up their pension income, there is undoubtedly a requirement for more equity release advisers.
“Unless a broker is regularly advising on a decent number of equity release cases, it is difficult to maintain competency and up-to-date product knowledge and we believe qualifications should be expanded to include more tax, welfare and pension knowledge as lifetime mortgages can significantly affect these areas of a client’s financial life.”
Steve Wilkie, managing director of lifetime mortgage experts Responsible Life says: “Equity release has become a mainstay of financial planning for people approaching and in retirement.
“Flexibility is the buzzword and the industry has risen to the challenge, delivering more personalised products that enable customers to fulfil their retirement plans, whether that’s making home improvements or helping grandchildren onto the property ladder.
“The industry has grown without the weight of government support behind it. It’s about time the government recognised the value of equity release as a legitimate finance option in retirement.”
Rachel Springall, finance expert at Moneyfacts.co.uk, says: “It is worth keeping in mind that that equity release is not solely aimed at the equity rich but cash-poor or for those looking to plug the gap of their later life care costs. These types of mortgages could be an option for those hoping to soften any inheritance tax blow while lifetime mortgages may also be an alternative to borrowers who have considered downsizing, but who do not want to move and pay stamp duty.”
Releasing equity from your home is a big decision at any stage of life, but particularly if you are approaching retirement or retired, that is why getting professional financial advice before you do so is key, in order to understand the full financial and legal implications of equity release.
Donovan Goodman, independent financial adviser at Parklands Financial Adviser says: “Our IFA practice is very active in this area after having branched out into lifetime mortgage advice and launched a separate brand to target this market. We feel very strongly that this area of advice needs to be tackled by professionals who have a holistic understanding of a client’s financial situation and who are able to explore all the available alternatives and advise on these if necessary.
Goodman adds: “Where a typical equity release brokerage will start by trying to establish which lender offers the most suitable equity release product for their client, we start by establishing whether this is the right product for our client.
“Because we are IFAs, we can explore other options. Over the years, we have been able to postpone the setting up of an equity release arrangement by exhausting available pension and savings plans first.
“Of course, where a lifetime mortgage is the only solution for the client, we offer whole of market advice to find the most suitable deal. As members of the Equity Release Council, we embrace all their standards when approaching how we advise our clients but we added additional steps that we take to safeguard our clients and their loved ones.”
Whatever is done with the equity released from a home, all family members must be informed of what is being done, as it might affect what kind of inheritance is going to be received in the long-term.
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