Financial advisers see equity release becoming mainstream within 10 years
The majority of financial advisers, some 61%, believe that equity release will be regarded as a mainstream part of housing market finance within the next decade.
There is still a lot of misunderstanding about equity release, however, with a new study from LV= finding that 55% of consumers are worried about how it will impact the future ownership of their home.
The research also found that some 70% of advisers have encountered barriers when advising home owners about equity release. These included a lack of understanding of the product and a lack of knowledge of what plan suits needs.
The most common reason for taking out equity release was to supplement retirement income with 63% of clients doing so, followed by 32% wanting to support loved ones financially, 26% for home improvements and 25% to pay off debt.
Nearly half of advisers, some 48%, had clients who think they will end up owing more than their home is worth, and 46% said that clients are often worried that equity release will leave them unable to pass their house on to their family.
‘Equity release is increasingly being seen as a mainstream option in retirement and rightly so. The Government last year backed a Select Committee recommendation that the new Money and Pensions Service sign posted retirees to consider home finance options including equity release as part of a broader retirement planning strategy,’ said Andrew Gilbert, director of Proposition, Savings and Retirement at LV=.
‘I believe that it’s our job to equip advisers with the knowledge and products they need to provide their clients with the right choices to support their retirement. Our findings highlighted that only 25% of advisers felt most informed about equity release compared to 91% for pensions and 74% for annuities,’ he pointed out.
‘The Equity Release Council also plays an important role, providing a wealth of online materials including the Adviser Guide to Equity Release. The resources are out there for advisers who want to make the most of this increasingly mainstream retirement planning option,’ he added.