Proceeds of an equity release plan can be used in 3 main ways
. Meet an immediate capital need
. Meet capital needs now and future and
. Provide a source of income
Most popular use of equity release
. 38% paying of mortgage
. 37% home/garden improvement
. 29% paying debt
. 20% gifting to family/friends
. 9% holiday
Two types of homeowners that need equity release
. Need Sale
. Aspirational sale
Average cost of care
. £35k a year or 49k with a nurse
Where should the customer be referred if needing to talk about debt
Debt counselling is a regulated activity. The advisor should refer customer to stepchange or national debt if not to do with equity release
Occupational pensions increase in line with?
Consumer prices index rather than average earnings
What consumer guidance was released after the so called pension freedoms?
Pension wise to help educate consumers on their available choicea
Holding cash on deposit could affect?
- Customers right to means tested benefits
- rare cases very old clients, may affect married couples allowance (1 spouse born before 6th april 1935 are entitled to additional allowance
Draw downs
- not taxable
- does not affect marriage allowance
- does not affect means tested benefits
Drawbacks on drawdown
- reductions in property price could lead to restricted withdrawals
- its common for fuether witbdrawals to be charged at interest rate at the time resulting in more interest roll up
- the lender could withdraw from market altogether
Portability
- lifetime must meet LTV normal parameters. If higher homeowner must make partial payment
- home reversion plan - moving to a less expensive property may mean a payment is needed
Flexibility
- does the product allow for spouse to he added?
- part of complete repayment?
- allow for a move to shelterd accommodation?
- any payment if planholdee goes into long-term care or dies in short term?
Lifetime mortgage requirements - applicant
- minimum age is 55 for many schemes
- uses youngest age for joint application
- may be no maximum age
- joint - the loan is not repayable until second death/long term care
Home reversion plan - applicant
- minimum age 60
- youngest age for joint
- may be no max age
- joint - property not sold until second death/long term care
Lifetime requirements - property
- typical minimum property is 70k
- borrowes a % of the property
- secured as first loan
Home reversion requirements - property
- minimum property value 80k
- must be in condition of repair acceptable to lender
Properties not usually accepted or extra criteria
- leasehold - minimum term exists
- prefabricated/mobile phones or retirement flats not usually accepted
