Later life lending

Helping you to expand your scope of services to the over 55s.

The OECD says there will be more than 35 people over 65 for every 100 of working age by 2025. We have an aging population, and it’s a group of people who are sitting on significant amounts of equity in their homes. Demographics dictate that later life lending is one of the biggest areas of opportunity for brokers, but it is a specialist area and equity release has its own qualifications and separate permissions.

Brightstar has teamed up with Sentry Lifetime to enable you to offer a range of quality equity release solutions to your clients. Sentry Lifetime are a highly experienced team of FCA regulated professionals who hold all the specialist qualifications in their field and are proud members of the Equity Release Council. They provide whole of market, independent lifetime mortgage advice covering several approaches to obtain the equity release solution to suit your clients’ individual circumstances.

By partnering with Brightstar, you can now expand your client offering even further by referring your client, and still earn a share of the proc fee.

What is equity release?

Equity release is designed for the over 55s who wish to raise tax-free funds to enhance their retirement by using the equity in their home, while continuing to live in it.

The different types of equity release.

Lifetime mortgages.

These are the most popular form of equity release as the borrower retains ownership of the property. Unlike a traditional mortgage, lending is based on the market value of the property and age and health status of the borrower; therefore the client’s income and credit history is not taken into account.

Lifetime mortgages allow the borrower to release funds for any purpose and they are not required to make any repayments. The funds can be released as a lump sum or in smaller payments as a drawdown facility to be used as and when they’re required.

The interest is typically ‘rolled up’ and added to the amount owed each month. A lifetime mortgage is usually repaid from the sale of the client’s home when they or the remaining applicant dies or enters long-term care.

There is a ‘no negative equity’ guarantee, so your client or their estate beneficiaries will never be liable to pay anything over the value of their home. The client can opt to include ‘inheritance protection’ with some plans that will guarantee an agreed percentage of their home’s value will be passed down, irrelevant of how much interest is owed.

Home reversion plans.*

*Please note, this is not an area we assist with and is for information purposes only.

Home reversion plans are set up so that the client sells part or all of their property at less than its market value to release a tax-free lump sum, a regular income or both. The client is able to remain in their home, as a lifetime tenant, on a rent-free basis.

The client will usually only receive 20–60% of the value of the property, depending on the market value of their home, the client’s age and status of their health.

Home reversion plans are high risk products. They could have a major impact for tax, benefits, inheritance and long-term financial planning, so this is not an area that Brightstar and Sentry Lifetime offer advice for.

Reassuring your clients and dispelling the equity release myths.

Equity release has a bad reputation due to the mis-selling that occurred in the late 1980s and early 1990s. Since then, the industry has introduced a magnitude of regulation which protects the consumer. The Equity Release Council (formerly known as Safe Home Income Plans, SHIP) is an independent body dedicated to the protection of equity release plan holders and the promotion of safe equity release plans who we are in full support of.

Our partners at Sentry Lifetime take extra special care when discussing lifetime mortgage products with your clients and often involve other family members in the process to ensure everyone is comfortable with the products and options.

Lifetime mortgages have been designed to help people who are over the age of 55 and consider themselves as ‘asset rich but cash poor’, i.e. they have a lot of equity in their home which they wish to access as they do not have enough cash in the bank for their goals.

Inheritance can be important to people and is always to be carefully considered. Sentry Lifetime will discuss the implications on equity release and inheritance with your client in detail and in some scenarios put in place inheritance protections.

The most common myths associated with equity release:

• I won’t own my home anymore, so I might lose it.
  A surprisingly common misconception. People are regularly relieved to hear that a lifetime mortgage means they remain the owner of their home.
• I don’t want another mortgage now, I can’t afford the repayments
  The downside of discovering that the most popular equity release product is actually a mortgage. Doubts are often dispelled once learned that no repayments are normally required until the borrower dies or goes into long-term care.
  
• I have a blemished credit record.
  Lending is based on the market value of the property, age and health status of the borrower. Income and credit history are not taken into account.
• I don’t want my children inheriting a debt.
  The ‘no negative equity guarantee’ invariably comes as a pleasant surprise to people with little prior knowledge of equity release products.
• I won’t be able to leave anything to my children or grandchildren.
  We encourage good communication between family members before someone opts for equity release. This gives potential beneficiaries the chance to clarify their true priorities. There is also the option to take up an equity release product with built-in equity protection to provide an ‘inheritance guarantee’.
• I might not want to stay here forever. Wouldn’t equity release tie me down to this home?
  Again, many people are surprised to learn that portable equity release products are available, depending on a number of criteria including the value of the home being moved into.

Some of the reasons your clients choose equity release.

• Helping family members, such as contributing to education fees or getting them onto the property ladder.
• Home improvements to enhance their home or carry out adaptions that make it possible for them to stay in their home longer term.
• Holidays and trips to help enhance their retirement and get the most out of it.
• Lifestyle improvements like a new car, a hobby or to provide care in the home.
• Provide additional income to supplement a pension.
• Pay off outstanding debts to relieve the pressure of monthly outgoings.

A simple process – for you and your client.

• Contact us using the ‘refer client’ button above.
• Sentry Lifetime will contact your client upon your approval and discuss their requirements in more detail.
• Sentry Lifetime will manage the advice process, home visits are possible if required by the client and logistically suitable. They will even offer to include family members in the process to answer any questions they may have.
• The proc fee share is payable on completion.

Our usual no cross-selling guarantee applies to all Sentry Lifetime referrals

Sentry Advice trading as Sentry Lifetime. 2a London Road, East Grinstead, West Sussex RH19 1AG, Companies House registration number 8257351. FCA number 624557.