POTENTIAL CHALLENGES CLIENTS FACE WHEN CONSIDERING EQUITY RELEASE

July 2024

Welcome back to our series of blogs dedicated to navigating the world of property finance in later life. In this edition, we focus on the potential challenges clients may face when considering equity release from their homes. We will cover the realisation of financial need, the emotional journey, the evolving reputation of the equity release market, the importance of quality advice, and the impact of financial stress on overall well-being. Join us as we provide comprehensive guidance on these critical aspects and help you explore your options with confidence.

The Client Realisation They May Need Additional Finance

Many people reach a stage in their lives where they realise, they might need additional finance in their later years but are unsure of their options. Some may have an existing mortgage that extends into retirement, causing concern about future affordability. Others might have an interest-only loan with no viable repayment plan. Additionally, some may find themselves simply running out of cash, with their pensions not providing the anticipated support. In these or other scenarios, clients recognise a potential issue but are unsure of where to turn for help.

The Emotional Challenge

The emotional journey for clients facing these financial challenges is significant. Many plan for a secure retirement only to find that it may not happen as expected. This realisation often develops slowly, yet the problem persists. Clients may not know what to do, might be unable to pay more into their pensions, or make mortgage overpayments. They might feel embarrassed or believe they have let themselves down, even though this is not true. These feelings can lead to suffering in silence, exacerbating the emotional burden.

The Reputation of the Equity Release Market

There is no denying the past poor reputation of the equity release market. However, the landscape has dramatically improved with tighter regulation and the Equity Release Council offering products with strong safeguards. The regulator has reinforced consumer duty to ensure that lenders and brokers act in the best interests of clients both immediately and in the long term. Product innovation is improving, with lenders creating later life solutions tailored to client needs, and this trend is expected to continue as

the market grows.

The Quality of Advice

High-quality advice and accessible advisers help break down barriers, providing a safe space for clients to discuss their circumstances and concerns. Empathetic and reassuring advisers can offer a holistic approach to the options available, guiding clients to the most appropriate solutions. Advisers should always consider clients' needs and wants and, where appropriate, involve family members to reassure the client. As the saying goes, a problem shared is a problem halved.

Finance Can Be the Biggest Form of Stress

While it is not always possible to resolve every issue, discussing problems and implementing a plan can significantly improve a client's financial health. But what about their mental and physical health? Removing financial stress has a positive impact on mental well-being and can aid physical health. For example, a client struggling with property upkeep and minimal income saw their mental and physical health decline. We met, addressed the issues, implemented a plan, and released equity. Recently, we saw them enjoying a new lease on life, a testament to the positive impact of addressing financial concerns.

Conclusion

It is crucial to talk to a professional adviser and seek independent advice. Advisers can be found through the Equity Release Council website. Taking the first step can lead to finding the best solution for your financial future.

Stay tuned for our next instalment, where we will continue to explore the ins and outs of lifetime mortgages and how they could benefit you.

Remember, when considering your financial options in later life, always seek independent advice to ensure you make the best decision for your circumstances.

If you have any questions or concerns, feel free to reach out to us – we are here to help you every step of the way.

Until next time,  

Iain