Why do 90% of customers recommend Equity Release?
Craig is joined by Equity Release Adviser, Mark Thompson to discuss a recent study that reveals 90% of customers would recommend equity release to family and friends.
A positive endorsement for equity release
A recommendation from nine out of 10 people is quite unusual, and this report interviewed about 600 customers to get this result.
It’s not surprising to us as equity release specialists, because we spend most of our time talking about how positive this type of product is and how it is life changing for some people. But it’s always nice to hear from customers who say that the product was worth it for them and that they would recommend it.
Improved quality of life
This survey found that more than two in three customers said that equity release had made a substantial difference to their quality of life. In later life, particularly at 65 and over, quality of life isn’t just about money.
But financial security is so important as you grow older. You’re not able to go out and earn additional cash like you used to. When you’ve worked all your life, it would be very stressful to think that you don’t have enough money to enjoy the next 10, 20, or even 30 years.
There’s a lot of talk about wellbeing and mental health for younger people but these discussions are less focused on the more mature generation who tend to feel that they just need to get on with things. So anything that can reduce the pressure on us as we grow older is important.
Equity release can relieve money worries
I enjoy my job because often I’m helping people in distressed financial situations to really change their lives, which is what this report has found.
Equity release really does improve people’s standard of living and allows them to help family and friends if they want to.
Avoiding the need to move home
We’re increasingly seeing people come to us who took out an interest-only mortgage 20 or 25 years ago and are now receiving letters to say that the bank wants the capital back. Many don’t have the funds available – a worry which can really affect your mental health.
It will certainly affect your wellbeing if you will have to sell your house to repay the debt. But equity release is another option for people in that situation.
They say the most stressful things in life are death, divorce and moving home. So in later life the prospect of having to move home is very daunting. Many clients don’t want to move, they want to stay where they are.
Equity release on a purchase
People are increasingly becoming aware that they can get equity release on a purchase. You can buy a house using equity release, which opens up a whole new channel of opportunities.
As house prices rise, it’s good from the equity release point of view because you have increasing equity in your own home. A typical client scenario is where they are looking to downsize and can’t find the perfect house in the location and their price range.
But by using equity release on the purchase they can increase their target property price which means it’s easier to find a perfect home.
People don’t want to borrow – or they want to borrow more
The survey asked people about if they had any regrets about taking equity release – and while the majority of people had no regrets, 12% wished they didn’t have to borrow. That’s understandable!
But interestingly, another 12% wish that they could borrow more money. Another interesting finding is that 21% of people said that they were sad there were no alternatives available to them. But in fact equity release is the alternative to selling your family home.
This figure might decrease over time as equity release is becoming more and more flexible, with the ability to make some repayments or to protect some inheritance – and probably new innovations will follow in the years to come. So it feels like there is more choice about how you use Equity Release.
A realistic solution to pension challenges
It’s very difficult when you’ve worked hard all your life to realise that you don’t have enough in your pension pot. As today’s 40 and 50 year olds come to retirement they won’t be able to rely on government support, especially after Covid.
Equity release could be a real lifeline for people in that situation and the products will continue to evolve over the years to come. Just looking at the rates – 20 years ago typical rates were 6.8% to 7%, but today the average is around 2%-3%.
The features will evolve too. Around 25% of equity release products now allow you to protect a portion of your equity to pass on to your family as an inheritance.
Leaving an inheritance
One of the main concerns from clients is about what they can leave to their children and whether it will be enough. While there are no guarantees about the housing market, we’ve all seen major house price rises in our lifetimes, and we always help people understand the impact of equity release graphically, showing how the market and interest rates will affect their equity in the future.
Involve the family
If you decide that equity release will be right for you, we always encourage you to get the family involved, especially the people that will be your beneficiaries. This study found that over 60% of people involved their family and they were supportive of their choice.
It’s partly that you don’t want them to have any nasty surprises, and partly that having your children involved means they can help you make decisions or assist further down the line.
We find that the main complaints about equity release are not from our clients but from their families, mainly when they haven’t been involved in the process. It’s often that they aren’t sure whether the product is safe, makes financial sense or has been sold correctly. Usually when they understand the details they are much happier.
Find a good adviser
The report found that 90% of customers say their adviser has explained the product and process very well, which is great feedback.
You won’t find that level of support in the normal mortgage market or the financial advice market. It reflects really well on the people involved in giving advice and the regulation that goes with it.
It really is essential that every client understands exactly how their equity release product works and what to expect. That way they can make an informed choice and feel in control of what they are doing.