Q&A with Jane Forshaw, BDM at Pure Retirement

Following our event in June ‘Understanding Equity Release and How it Can Help You to Educate Your Clients’ we caught up with Jane Forshaw, Business Development Manager at Pure Retirement, who was a speaker at the event.

The equity release market has grown rapidly over the past couple of years and continues to achieve record-breaking borrower volumes. We caught up to talk about the growth of the industry, product innovation and meeting consumer needs.

 

Tell us a little bit about Pure Retirement and your role

Pure Retirement is a specialist mortgage lender in the equity release industry and prides itself on remaining at the forefront of the equity release market.

We bring a focus and accessibility to all our customers. The decision to release equity from your home is such big decision that needs a great deal of thought and attention.

We have 3 Business Development Managers at Pure who have long recognised and understood the need for strong and effective relationship building. Our working philosophy focuses on providing a dedicated service that works with advisers to improve their awareness of product and services, not just at Pure but in the wider market space.

Furthermore, there is a passion to communicate the wider benefits of not just our own innovative solutions and market-leading service, but also the opportunities within the wider market.

Not only do we work closely with our existing advisers, but we host a variety of Roadshow events and attend external events where we can access those who are newly qualified or perhaps thinking about becoming qualified. It is about education and understanding the wider market, providing more of an understanding to equip individuals with all the essential tools they need when embarking on their equity release journey.

The equity release industry is growing at an unbelievable rate with more and more people taking equity our of their property.

 

From your experience, why is there an increasing number of people taking equity release?

Initially, equity release may have been something to consider out of necessity. This has changed in recent times with people considering releasing equity to fund their retirement and fulfil their aspirations in later life. There are a considerable number of people who are retiring on much less than what they had once perhaps predicted.

A large number of pensioners can be termed ‘asset rich, cash poor’. People spend years paying off their mortgage with very little savings. Equity release is a great way to bridge the gap in later years and to provide retirees with the lifestyle they had hoped for.

Equity release is still being used to clear existing debt or perhaps gift to children and grandchildren. However, nowadays aspirational needs are also being met by going on holiday, making home improvements and even buying a sports car that has always been on the bucket list!

 

How well do you think the industry is coping with the increased demand?

The equity release industry has seen high levels of product innovation and development over the last few years. The number of plans available has increased and there are so many options available on the market now for customers to consider.

The industry is thriving with the increased demand and we have certainly seen some record breaking figures that keep increasing. The equity release industry had a turnover of £3.94 billion in 2018 and the industry is set to beat that in 2019.

Whilst the industry is booming, it can’t be taken for granted that education is paramount for advisers so that they are well equipped to advise clients on releasing equity. The wider picture needs to be taken into consideration and we need knowledgeable advisers who can work with their clients and lenders within the marketplace.

We are also seeing an increased number of advisers looking to be a part of the equity release market. More and more IFAs in particular are excited to be a part of this growing industry. Importantly, expert advice from a qualified equity release adviser is paramount.

 

The number of products available has more than doubled in recent years with rates now as low as 2.99%, what are your thoughts on product innovation and the sustainability of these new products?

The products have changed dramatically and 2019 saw rates as low as 2.99%. The amount of flexibility with products now makes them increasingly attractive to those considering later life lending.

There were 233 plans available to clients that were considering equity release in Q1 of 2019. In addition, there is choice available to prospective clients now and that is definitely something that we have succeeded at when it comes to product innovation. An increasing number of plans now include inheritance and downsizing protection, 3 year exemption on long term care/death and the choice to make partial repayment to name a few features – it’s totally down to the client to decide what they want.

 

What are some of the biggest challenges that advisers face when working with clients?

As we know, equity release has not always been seen in the most favourable of terms. In the past, it has been seen as more of a ‘taboo’ subject and one that was seen in more of a negative light.

This train of thought is increasingly becoming a thing of the past.

There are often misconceptions. For example, it may be thought that children will be left with debt and the debt will become more than the house is worth. None of these are the case. It is about education and people understanding how beneficial and life changing equity release can really be.

 

How do you see the equity release market changing in the next few years?

There is huge growth potential within the equity release market. There are currently 12 million people aged 65 and over in the UK, so there is great opportunity for lenders and borrowers alike.

The market share is beginning to equalise which demonstrates the desire for equity release products beyond doubt. The growth in equity release has been driven by innovation across the later life lending market; the number of product options available has more than doubled in two years.

Innovation in recent years has certainly brought more competition to later life lending, helping customers achieve their necessary and/or aspirational needs.

As a result, I can only imagine that things will continue to grow and prosper within this exciting industry.

PRP commended at the Moneyfacts Awards 2019

The team at Personal Retirement Planning was invited to attend the Investment Life & Pensions Moneyfacts Awards on 19th September at The London Hilton on Park Lane.

The awards, which have been running since 2005, recognise the best in class across a range of financial services including equity release, pensions, SIPPs, ISAs, annuities, investment funds and more.

This was the first time we had entered the Moneyfacts awards and so we were delighted to be shortlisted for ‘Equity Release Adviser of the Year’.

What was even more unexpected is that we won the ‘Commended’ award!

Following the awards, Barry Leigh, Managing Director at PRP, said “We’re truly honored to have been recognised for such a prestigious award at what is one of the most well-known and respected award ceremonies in the industry. We’d like to congratulate Age Partnership who was Highly Commended and Access Equity Release who was the Winner. Also, a huge thank you to the team at Moneyfacts Group for hosting such a fantastic evening. We look forward to next year’s event!”

 

 

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Q&A with Natalie Payne from Mackrell Turner Garrett

Natalie-Payne

Following our event in June ‘Understanding Equity Release and How it Can Help You to Educate Your Clients’ we caught up with Natalie Payne, Private Client Solicitor at Mackrell Turner Garrett, who was a speaker at the event.

The number of people setting up a Lasting Power of Attorney has more than doubled in the past three years. Property is typically their most valuable asset, especially for older homeowners, and so we spoke to Natalie to learn more about what factors are driving this trend. We also discussed the wider role and importance of legal advice in later life planning.

 

Tell us about your role at Mackrell Turner Garrett.

 

I am a Private Client Solicitor at Mackrell Turner Garrett.  I have a very hands on approach with my clients and I guide them through every step when looking after their personal affairs and/or those of their friends and family.

I handle a wide range of multi-jurisdictional work including Wills, estate administration, powers of attorney, trusts, inheritance tax mitigation and powers of attorney/deputyships. I also assist in setting up and managing charitable trusts.

 

 

From your experience, why is there an increasing number of people applying for a Lasting Power of Attorney?

In recent years, the interest in professional services related to retirement planning has grown rapidly as family dynamics and financial management has become more complex. People want to live comfortably and securely later in life and they look for legal and financial advice that could help them achieve this.

Many people realise the impact physical and mental illnesses may have on their ability to make decisions, and they wish to ensure their personal and financial matters will be handled safely in any situation. This has fuelled the recognition that Lasting Powers of Attorney are an essential part of retirement planning.

 

Why is it important that people create a Will and register an LPA?

 

Creating both types of LPAs ensures that your chosen family members and/or friends, will be able to make financial and personal welfare decisions on your behalf, if you are no longer able to or wish to.

Without an LPA, your family cannot deal with certain matters for you such as renting your home or pay care home fees and are very likely to need to apply to the Court of Protection to appoint a deputy. This is a slower and more expensive process than creating an LPA ahead of time, and you will not have the opportunity to choose the person who looks after you.

Various assets such as joint bank accounts may be as well affected and temporarily frozen. The second account holder will not be able to freely withdraw money and manage their bank account until an order from the Court of Protection is issued.

 

How does your role as a solicitor interact with that of a financial adviser?

 

The Equity Release Council requires all borrowers to seek independent legal advice prior to releasing cash from their property. Legal advice acts as an additional layer of security beyond that of a financial adviser and is also impartial. However, a solicitor cannot provide financial advice and so borrowers must also talk to a qualified financial adviser who can recommend the most suitable plan for them based on their individual circumstances and how they choose to spend their money. Not seeking a professional financial advice could affect client’s entitlement to state benefits or under-value their home.

Solicitors assist with the better protection of assets upon death and loss of capacity by appointing the right people to look after you and your assets.

 

What is the biggest challenge you face when working with private clients and their property?

 

Property is usually the most valuable asset that people own, and the biggest challenges we face are related to its ownership after death or divorce. This is especially difficult when there is a mortgage over the property or when there are no Wills and LPAs in place.

Many people wish to release equity from their home to enjoy the accumulated wealth but do not wish to move. Also there are not many inheritance tax reliefs on property so it makes protecting this asset for some people very difficult.

 

What challenges does Equity Release help you and your clients to solve?

 

Equity Release allows our clients to access their property wealth without having to sell or move out of the property immediately. It converts their home’s value into tax-free money which they can use for example to increase their monthly income in retirement, to cover care home fees, clear credit cards and loans, or help their younger family members on the property ladder.

Equity Release also helps to resolve issues related to inheritance. It reduces the Inheritance Tax that would be imposed on family members. Clients who choose Equity Release are also spared the pressure that some children put on their parents and grandparents to provide them with an inheritance during their lifetime and they can keep living in their home.

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Q&A with Jacqueline Berry, Founder of My Care Consultant

my care consultant

Following our event in June ‘Understanding Equity Release and How it Can Help You to Educate Your Clients’ we caught up with Jacqueline Berry, Founder of My Care Consultant, who was a speaker at the event.

There is an increasing number of people using equity release to fund care costs in later life and so we want to help shed some light on the care sector and the importance of planning ahead for this eventuality, and Jacqueline is best placed to highlight exactly that.

What is My Care Consultant and how do you help your clients?

My Care Consultant is a care navigator, we work with people that need care and their families to help them navigate the complex social and health care system. We take a unified approach to helping people understand the value of professional services such as legal and financial advice, and signpost to these. We also work closely with financial advisers to help them deliver a joined-up approach to their financial planning.

I founded the company in early 2016. I have unique experience of having worked for a major care annuity provider, being CF8 qualified, having dealt with financial advisers for over a decade in this space, whilst also having extensive experience of dealing direct with the public.

jacqueline berry

What are the biggest challenges facing the care industry today?

There are several challenges we encounter within the care industry however; the main issue we find derives from the lack of understanding from the public. There is a real public misconception that social care is free, so most people tend not plan for it and they don’t realise how expensive it can be. Sadly, most people find themselves dealing with a care need, usually on behalf of a loved one, at a ‘critical need’ point, which can be stressful, confusing and can lead to suboptimal outcomes as most people don’t have any experience of navigating the system.

We have an ageing population in the UK.  Studies show that we are living longer, with more of us developing social care needs in later life.  This is putting pressure on the NHS and Local Authorities, however, despite increasing needs, there has been a 60p in the pound reduction in central government funding over the past 8 years (with only a small % of this clawed back by increases in council tax).  Arguably, some of the issues we face are a reflection of the huge funding challenges Local Authorities have face in recent years.

There is also a political challenge. It’s clear that the political challenge of mending what many see as a broken care system is a tin can that many governments have placed in the ‘too difficult’ box and kicked down a lengthy road. I’ve now lost count of the number of times and dates the much-awaited Green Paper on Social Care funding has been postponed in the wake of Brexit.  Even when the Green Paper does see the light of day, many will know that it will not be a roadmap for future change in terms of an agreed proposal, more a series of proposals for consultation.

Likewise, what are the most common problems that your clients face in the process of seeking care?

In an attempt to give people better access to support, as part of the 2014 Care Act, Local Authorities now have to offer a social care ‘needs’ assessment to all who request one, regardless of whether they will self-fund their care. In reality however, many people trying to navigate care needs face ongoing confusion and anxiety, as they stagger from one source of information to another. If they are lucky, they will find answers that work for them. If they are not, they can often receive inaccurate or sub optimal advice to their detriment. At My Care Consultant we come across this on a regular basis.

What are some of the funding options available to people needing long-term care in later life?

There are 9 ways to pay for care, these are:

  1. A Deferred Payment Scheme
  2. Rental income from residential property
  3. Equity released from residential property
  4. Funds released through the sale of residential property/downsizing
  5. Liquid assets/cash/income
  6. Investments/portfolios
  7. Pension income
  8. Long Term Care Insurance Product (LTCI)
  9. Third Party Top-ups

There are factors that we encourage clients to consider when deciding on which funding option is most suitable for them. For example, their family commitments, the level of care they need both now and in the future and government legislation. It’s really important to deal with a regulated financial adviser that holds the specific care advice qualification, as many people do not fully understand that these financial advisers are the only professionals able to advise on and recommend ‘Long Term Care Insurance’, also known as ‘Immediate Needs Annuities’ that guarantee to pay fees at any required level for as long as they are needed.

Has the role of property in paying for care changed in recent years? If so, how?

Residential property often represents many people’s largest financial asset which naturally puts property wealth at the centre of the debate about how social care should be funded.

The role of property in paying for social care is three-fold:

  1. Firstly, the ‘financial’ assessment determines how much of the cost of an individual’s care requirements will be paid for by their local authority, depending on their home ownership status, their level of income, capital, and their property wealth, among other factors.
  2. For those who are self-funding their care, there is the extent to which their residential property can be used to pay for their care, and how it might be used to do this.
  3. Lastly, the role of property as a constituent part of estate planning.

Property has an increasingly important role to play in funding social care due to the rising demand for it, the increasing need for domiciliary care and the concentration of property wealth being in the hands of older homeowners.

How does the role of giving advice on care interact with services such as equity release, pensions and investments?

This is a very important question and something that the team at My Care Consultant are proactively engaged with.

It is vital that financial advisers offering products such as equity release understand how financial advice interlinks with social care. An example of this is understanding how equity release could affect their state entitlements or how local authorities treat pension income. Advisers must factor in how any care funding decision made now, could impact their future options as their needs change. This is not only important to ensure best consumer outcomes, but also a key part of mitigating the business against risk.

To help address these challenges we have created a members only, online support resource for financial advisers and support staff on care and paying for care, called Care Box. Care Box provides members with a wide range of documents, tools, and guidance, aimed at helping financial advisers to achieve an integrated approach to their financial planning. Care Box was launched following huge demand from advisers and clients alike – a need for one, regularly updated and replenished resource on care and paying for care topics, held in one place.

You can sign up for a 1-month free trial of Care Box by clicking here (no payment details required).

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Equity Release FAQs

equity release FAQs

Equity Release is becoming an increasingly popular method of raising finance in later life. In 2018 alone a record-breaking £3.94 billion worth of equity was released from property in the UK.

As growing numbers of people explore this option in retirement, it is important that they are well-equipped to make an informed decision about whether equity release is right for them compared with other alternatives. You should seek advice from an Independent Financial Adviser to understand all options available to you based on your individual circumstances.

equity release FAQs

Here are some of the fundamental factors to consider:

What is Equity Release?

Equity Release is a loan secured against your property. It allows you to borrow cash that is tied up in the value of your home without needing to sell or downsize to access the funds. Typically, it is not a repayment loan, however with some plans you have the option to make repayments if you wish. Generally, the loan amount plus interest will be repaid either when you decide to sell the property, when you move into long term care or when you die.

Who is eligible for Equity Release?

To release cash tied up in your home you need to be aged 55 or over and own a property worth at least £70,000. If you apply for equity release as a couple, the youngest applicant must be at aged 55 or above. Although, bear in mind that the minimum age, property value and other eligibility criteria vary from one provider to another.

How much can you release?

The amount you can release depends on your age, the value of your property and your health and lifestyle. Generally, the older you are and the more your property is worth, the more you can release. Some providers take health and lifestyle choices into consideration which could enable you to release more money. It’s important to note that if you are applying as a couple the amount of equity you can release will be calculated based on the age of the youngest applicant.

You can use our Equity Release Calculator here to get an estimate of how much you could release.

Will you pay tax on the cash you release?

No, the money you release is tax-free. However, if you use the funds to make an investment you may be liable to pay tax on any interest you receive.

What can you use the money for?

You can choose to spend the money however you like. Some of the most popular reasons for releasing equity include:

  • To cover care costs in later life
  • To make home improvements or modifications
  • To clear credit cards or loans
  • To pay off an existing interest-only mortgage
  • To enjoy retirement by going on holiday
  • To replace an interest-only mortgage that is coming to an end
  • To help children or grandchildren get onto the property ladder
  • To reduce inheritance tax liability
  • To stay in a property after divorce or separation

Increasingly, people are releasing cash tied up in their property to help fund day-to-day living costs in retirement.

An adviser can recommend the most suitable equity release product dependent on how you choose to spend the money. For example, if you want to guarantee an inheritance for your family then a Protected Lifetime Mortgage might be the best option for you.

To see a list of different plans for different needs click here.

Will you still own your property?

If you take out a Lifetime Mortgage plan you will remain the owner of your home and can continue to reside there for as long as you live, or until you move into permanent care. However, if you take out a Home Reversion plan you sell part or 100% of your property to the scheme provider and they become a legal owner, with this option you can also continue to live in the property until you die or move into long term care.

Will you have to stay in the same property?

No, you have the freedom to sell and move to another property without financial penalty. In most cases you can transfer the equity release plan to your new property. However, this is subject to provider criteria and so it is important to check with your adviser before taking out a plan.

Will you owe more than your property is worth?

No, all plans that are approved by the Equity Release Council are protected by the “no negative equity guarantee”. This means that you and your estate will never owe more than the property is worth when it is sold.

If your property decreases in value and is not enough to cover the loan amount, the remainder of the loan will be written off.

Is Equity Release regulated?

Yes, equity release professionals are qualified to give advice and will hold certifications such as CeRER, CER and ERMAPC. Providers are regulated by the Financial Conduct Authority and the Equity Release Council which is the trade body.

Personal Retirement Planning is a proud member of the Equity Release Council and only provides plans that have been approved by them.

 

There are many more questions that our clients ask based on their individual circumstances. If you would like to know more about equity release, please feel free to give us a call or email info@prpltd.co.uk. We look forward to speaking with you.

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Equity Release: Educating Introducers to Educate Their Clients

Upcoming Event: June 12th at 9.00am – Understanding Equity Release and How it Can Help You to Educate Your Clients.

The demand for equity release has been growing exponentially, cementing its position in mainstream financial services as a crucial source of finance in later life. According to the Financial Times, UK homeowners aged 55 and over extract more than £10m of tax-free cash from their properties every day!

The steady growth of the equity release market is, in part, the result of product innovation and increased flexibility; providing more options to suit individual requirements. For example, drawdown lifetime mortgages have proved to be one of the most popular product types available.

However, with increased demand comes the need for tighter regulation, enhanced knowledge, skills and experience. The Equity Release Council has recognised the need for a new competency framework to guide and support industry professionals in delivering an effective service to consumers. Similarly, Personal Retirement Planning is proactively supporting the initiative by educating financial intermediaries on equity release, so they are better equipped to have conversations with their clients.


On June 12th we will be hosting a breakfast briefing event in London sponsored by Pure Retirement to educate professional introducers on the fundamentals of equity release so they can educate their clients.

Who can attend?

The event is suitable for financial intermediaries and professional introducers including IFAs, accountants, solicitors and mortgage brokers.


When and where is the event?

The event is on 12th June from 9.00am until 13.00pm at etc.venues Monument, 8 Eastcheap, London, EC3M 1AE.


What’s on the agenda?

  • An explanation of the fundamentals of equity release
  • The reasons why over 55s unlock cash from their properties
  • Why equity release could be the most suitable finance solution for your clients

Our speakers include:

Chris Flowers from Pure Retirement

pure-retirement

 

Jacqueline Berry from My Care Consultant

MyCareConsultant

Natalie Payne from Mackrell Turner Garrett

Mackrell Turner Garrett


Why should you attend?

  • To develop an understanding of equity release and how it can help your clients
  • Because your clients will expect you to talk about and explore this option with them
  • To learn how you can offer equity release to your clients
  • To meet and network with other industry professionals

Spaces are limited, if you are interested in attending please register now to secure your place!

For more information about the event, and to register, follow the link below to our Eventbrite page.

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Balancing Act

UK house price growth over the years has delivered increased property wealth for many…

To get a feel for house price growth, let’s take a look back. In the 20-year period to Q4 2018, house prices more than tripled* (even accounting for the Crash in 2007/8) – which equates to an average growth of about 6% a year.

If you’ve benefited from this growth and want to release some of your property’s value, do remember that if you take out a plan via a lender member of the Equity Release Council, there will be a no negative equity guarantee – limiting the roll-up effect to no more than the value of your home.

Plus, you could also take-up additional financial protections as part of your plan, which might further lessen the amount owed.
That said, a sum (plus any outstanding interest) will eventually need to be repaid, but against that, do also consider that there may be further house price growth over the years that may counter this debt.

Doing the maths…

Let’s assess a lump sum Lifetime Mortgage, and apply the average amount of £96,207, at the average lump sum customer fixed interest rate of 4.87%.** If you choose not to make any interest payments, then the total amount owed would have broadly doubled in 15 years.
To lessen the financial impact, you could opt for a draw down scheme, to avoid facing interest charges on any money you don’t need at that stage. Plus (whilst you don’t have to make any monthly payments), do consider paying the interest each month. The latter, alone, would save in the realms of £30,000 against the £196,325 owed (as per the 15-year chart example), although it would require almost £400 a month in interest payments.

Continued house price rises?

For the chart example, we’ve used a more conservative 2% growth figure, and applied that to the average house price of £312,301** for a lump-sum lifetime mortgage borrower. This will then give you a feel for possible property price growth vs. the cost of the loan.
Broadly, the chart shows that the size of the remaining equity in the property after 15 years would be slightly more than at the outset. And would be even more, if the interest payments had been made each month.

Of course, you must accept that there’s no guarantee of property price rises (they could just as easily fall), and the impact of inflation would need to be considered too.
(Sources: *Nationwide, House Prices to Q4 2018; **Equity Release Council, Autumn 2018 Market Report, 1st Half 2018 data)

Understandably, these are complex issues, with a bit of crystal ball gazing thrown in, so it’s essential that you take professional advice before making any decision.

Useful links
How much is your home worth?

Aside from getting it valued, you can check out the sale prices of comparable properties in your area – www.nethouseprices.com

Tracing lost or mislaid…

Pensionswww.gov.uk/find-lost-pension – 0800 731 0193
Bank, Building Society, or National Savings accounts www.mylostaccount.org.uk Bank account – 020 3934 0329 (UK Finance)
Building Society account – 020 7520 5900 (Building Societies Ass.)
National Savings account – 08085 007 007 (National Savings and Investments)
Insurance policies, pensions, unit trust holdings and share dividends
The Unclaimed Assets Register – www.uar.co.uk – 0333 000 0182

Information on State Benefits

To see what you may be entitled to – www.gov.uk/dwp

■ For Equity Release, we provide initial advice for free, and without obligation.
■ The contents of this article are believed to be correct at the date of publication (Jan. 2019).
■ Every care is taken that the information in this article is accurate at the time of going to press. However, all information and figures are subject to change and you should always make enquiries and check details and, where necessary, seek legal advice before entering into any transaction.
■This article is for information only and does not constitute advice. You should seek professional advice tailored to your needs and circumstances before making any decisions.

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