A recent article by Chloe Cheung looks at Equity Release during the pandemic. Later Life Money director, Steve Paterson comments...
There are signs equity release is increasingly being used to support home purchases of first-time buyers, according to Knowledge Bank.
Data from the mortgage lending criteria tracker for September showed changes in the usual searches by brokers, which the firm said was a sign homeowner were looking to release equity for a growing number of reasons.
According to Knowledge Bank, the shortage of high LTV products offered by mainstream lenders was pushing people to turn to equity release to help younger family members get onto the property ladder.
Matthew Corker, lender relationship manager at Knowledge Bank, said: “The equity release market saw the highest levels of disruption in September, which is due to changing consumer habits as a direct result of Covid-19.
“The shortage of high LTV mortgages offered by lenders could well be leading to parents or relatives releasing equity to help younger family members get onto the ladder.”
The most popular search in the equity release market last month was for criteria on non-borrowing occupiers.
But Steve Paterson, later life financial specialist at Later Life Money, said he was “very surprised” to see this criteria appear in the top five searches by brokers.
Mr Paterson said: “I've dealt with a case in which a couple was misadvised on the matter and the surviving spouse nearly found themselves homeless (the family stepped in to help). I was very surprised to see this in the top five searches as this situation is very rare in my experience.”
Searches in the equity release market for lending criteria on properties with an annex, outbuildings, land or acreage was the third most popular search among brokers.
According to Knowledge Bank, this demonstrated that people were thinking of building onto the existing property to accommodate intergenerational living.
Later Life Money’s Mr Paterson said: “I think the searches about buildings with annexes perhaps demonstrates that many people are now seeking equity release to plan ahead as they are wary of the prospect of themselves or family having to enter care homes following the impact of the virus and having no end in sight to the pandemic.”
Find the link to Financial Advisor article here: https://www.ftadviser.com/mortgages/2020/10/08/turn-to-equity-release-for-house-deposit-top-ups/