In this welcome time of Consumer Duty, we must be especially careful about the language we use.
To use ‘later life lending’ and ‘equity release’ interchangeably, could damage our industry at a time when we’re all working so hard to develop and sell wider products and options for borrowers aged 50 to 90-plus years old.
What is later life lending?
Later life lending does not simply refer to equity release, otherwise known as lifetime mortgages. No matter how old your client, a lender may still consider them suitable for a standard capital and interest mortgage or a standard interest-only mortgage, as well as the more traditional retirement interest-only (RIO), and equity release options.
While equity release is a great solution for some borrowers, the Financial Conduct Authority (FCA) has, since July 2023, been urging discussions around alternatives to equity release in the later life lending market.
Consumers aged 50 to 90-plus should not feel restricted to equity release products in later life. There are hundreds of wider product options on the market now for people in this age bracket. Many borrowers in this age group that we talk to neither want to nor have to release equity from their homes. Some do, and that’s great – it works for them. But it’s not for everyone.
Instead, lenders such as LiveMore that specialises in later life lending, take a truly holistic view on affordability, what qualifies as income, and what kinds of property they’ll lend on. These lenders can offer not just equity release (lifetime mortgages) products, but also standard capital and interest, standard interest only and RIO mortgages.
When the FCA published its Later Life Lending Review in September 2023, they made it very clear that the advice provided to many older borrowers did not meet the standards expected due to firms insufficiently evidencing the consumer’s individual circumstances, and the advice lacked discussion around alternatives to equity release mortgages.
Technology driving Consumer Duty compliance in later life lending
We understand that the wider later life lending market can seem challenging to brokers new to the market, or those who specialise purely in equity release. As a result of broker feedback on the subject, we have developed an affordability calculator and product matching engine called LiveMore Mortgage Matcher, this works with brokers to take away the complexity of selecting the appropriate product and amount a client can afford. Helping to cut through the complexities of later life lending.
What’s more, since it launched in September 2023, intermediaries have secured a 41% uplift in the loan amounts they can offer their over-50s clients. This kind of technology supports Consumer Duty compliance, making it so much easier for lenders and brokers to put the consumer first, rather than the product.
