Lending into Retirement Do you have clients who: are too young for equity release? prefer a traditional approach to lending? are over 50 and coming to the end of an interest-only mortgage with no repayment vehicle? Our specialist lending into retirement panel could be the solution. FOR INTERMEDIARY USE ONLY An equity release qualification IS NOT required to access our specialist panel of lenders.
Lending into Retirement Introduction About the lending into retirement market The demography of the UK is changing; with an ever-increasing life expectancy, the proportion of the population reaching retirement age is only going to go up. Recognising these changes in the population, the mortgage market has reacted by introducing new ways for clients to borrow into retirement if they need to. This is a market that has long been inaccessible, with advisers having to turn clients away as they would not have been able to find a solution that meets the needs of an older borrower. But following much more scrutiny and reports from the Council of Mortgage Lenders and the Building Societies Association (BSA) on this area, the days of turning clients away for this reason are coming to an end. What does later life lending mean? Some lenders in this market offer conventional mortgages but allow the equity of the home to be used as the repayment vehicle. Later life lending is not just equity release, and by looking at all the available options highlighted in this guide, you can assist your customers whether you are advising in this market or not. Help your clients who: are too young for equity release prefer a more traditional mortgage are over 50 and coming to the end of an interest-only mortgage with no repayment vehicle. Plus, you DON T require an equity release qualification to access our specialist panel of lenders. Become a specialist Here at The Right Mortgage, we see this as a very lucrative, untapped market that we want to open up to our advisers, enabling you to introduce new revenue streams while achieving better consumer outcomes. As such, we have introduced a new panel of specialist lenders who offer lending into retirement. To accompany this guide, we will be holding a series of training events on the topic so that you are able to competently advise on the area. As the BSA say in their report on lending into retirement, these products aren t always riskier, they re just different, so it is important that you understand what those risks are and can advise your clients appropriately. 1
Lending into Retirement Contents Our panel of specialist lenders 3 Chorley Building Society 4 Marsden 5 Hodge Lifetime 6 Ipswich Building Society 7 Family Building Society Other later life planning services 8 One Family 50+ Plan 9 AIG Whole of Life & Care Cover Plan 10 The Right Will 11 The Right Solicitors 12 Golden Charter What could you earn from an average case? 13 Earning potential 2
Our panel of specialist lenders Our panel of specialist lenders We have a specialist panel of lenders who will lend to clients into and during their retirement, ensuring that you have access to a range of products to meet your client s needs. Chorley Building Society About Chorley Building Society offer a common-sense approach to mortgage lending, with direct access to experienced underwriters who assess each case individually. This flexible approach will consider your customer s personal circumstances, where automated credit scoring systems could rule them out, ensuring the borrower is at the heart of all their lending decisions. Lending into retirement Chorley Building Society recognises that the lending needs of borrowers are changing along with individual lifestyles, and are committed to providing products and lending solutions to meet these ever-changing needs. The Society believes that age discrimination is unacceptable in today s market and that later life lending is a specialist area that requires an individual assessment of the borrower s requirements both now and in the future. Why Chorley Building Society? Service driving, common-sense approach to mortgage lending which ensures the borrower is at the heart of all lending decisions; Direct access to experienced underwriters who assess each case individually; A flexible approach, that will consider your customer s personal circumstances, when automated credit scoring could rule them out; No maximum age limit; Able to consider earned income beyond age 70 (subject to feasibility); Able to lend into retirement and to borrowers who are already retired (subject to meeting appropriate criteria); Interest-only applications with suitable Repayment Strategies (subject to LTV limits); Downsizing is accepted as a Repayment Strategy (subject to meeting appropriate criteria); Case study Mr Millwood (aged 36) wished to purchase a property with his mother (aged 70). Mr Millwood could afford the mortgage based solely on his income and so Mrs Millwood s income did not need to be considered. The case was approved on a 20 year term on a Capital & Interest basis. Mr Millwood was asked to put life cover in place to protect Mrs Millwood in the event of his death. Website: http://www.chorleybs.co.uk/intermediary.html Tel: 01257 235001 Email: intermediaries@chorleybs.co.uk or jgoodwin@chorleybs.co.uk 3
Our panel of specialist lenders Marsden About Marsden Building Society has been lending into and during retirement since 2015 and has developed a tailored lending solution to support intermediaries with Older Borrower clients. What are the options available? Conventional mortgage to be paid off before retirement Lifetime mortgages such as equity release Their Older Borrower range- a conventional mortgage solution for borrowers approaching or in retirement. Marsden s research has highlighted that many of these clients are asset rich and cash poor and may have a range of reasons why they re looking to borrow money. Why Marsden Building Society? Whether your client is looking to remortgage to a new lender, wanting to downsize at the end of their term, or require some or all of their mortgage to be on interest - the Marsden can help. Many are looking to help children with a gifted deposit for a house and the Society will also consider debt consolidation up to 10,000. Applicants aged 55+ Income is based on Pension, Investments and Property a percentage of property income can be used to support affordability Also accept earned and self-employed income up to age 75 Minimum property valuations from 150,000 Minimum loan 30,000 Interest only up to 60% and repayment up to 70% LTV If the loan is on interest only, affordability is stressed on interest only Downsizing accepted as a repayment vehicle Early Repayment Charges for only 2 or 3 years - product dependent Case outside of criteria? Marsden will always take a look. about why we;re experts in 55+ lending by clicking here. Website: www.themarsden.co.uk/intermediaries Tel: 01282 440583 (Intermediary Support team) Email: intermediaries@themarsden.co.uk 4
Our panel of specialist lenders Hodge Lifetime About Hodge have been in the business of lending to older borrowers since 1965 and are one of a small number of lenders that provide an interest only residential mortgage for 55 to 95 year olds. Lending into retirement With an LTV of up to 60%, money can be used for varied purposes including re-mortgage, purchase, holiday home and debt consolidation. This isn t an equity release deal it s a standard residential mortgage where loan interest is repaid each month, your customers retain 100% ownership of their property and at the end of the mortgage they repay the capital through a specified repayment vehicle. Why Hodge Lifetime? Expertise A dedicated team of knowledgeable staff Personal approach Each case receives a personal service Choice Both fixed and variable rates on the 55+ product Competitive rates On the 55+ fixed option range from 3.10 to 3.30 with variable at 2.99 with a choice of 2 year and 5 year fixes Flexibility Offering the ability to overpay by up to 10% from day one, meaning your customer can reduce the capital on the mortgage as well as paying the interest monthly. Case study Mr & Mrs Smith are aged 78 & 63, both retired and are coming to the end of their interest only mortgage term. They want to borrow 80,000 on their property, to enable them to clear their existing mortgage and clear some unsecured borrowing. The property is currently valued at 240,000 and they want a mortgage term of 30 years. They have chosen downsizing as their preferred repayment strategy, as they wish to remain in their existing property for as long as they are able. Mr Smith is in receipt of a full State pension and Mrs Smith is due to receive a full State pension at 65. Additionally, Mr & Mrs Smith are in receipt of private defined benefit pensions for 25,700 & 15,000 which both have spouse benefit of 50%. The 55+ mortgage could be offered for the loan amount requested providing them with the flexibility to continue interest only mortgage payments and to remain in their current property and remain around their family. Website: www.hodgelifetime.co.uk Tel: 0800 731 4076 5
Ipswich Building Society Our panel of specialist lenders About Ipswich manually underwrite all mortgage cases, using a team of experts based in Suffolk. By judging each case on its merit, and not applying a one size fits all approach, they are able to help those who are credit worthy borrowers but may not fit the rigid criteria of mainstream lenders. Lending into retirement Ipswich believe that older borrowers should not be shut out of the mortgage market, and demonstrate this by having no maximum age. Why Ipswich Building Society? No maximum age Self-Employed Non-Manual up to age 75 without pension Interest only to age 75 with sale of property Above age 75 using other repayment vehicles Max 25 year term if over State Retirement Age (SRA) Max 75% LTV if over SRA and finishes before 75 Max 50% LTV if over SRA and finishes over 75 Joint applicants think about income if one passes away Independent Legal Advice required if applicant is over 75 at application Can assess using retired ONS data. Case study Mr Anderson had reached the end of his current mortgage and wanted to carry on living in the family home. Despite having a healthy pension he was struggling to find a lender who would help him as he was aged 72. Here at Ipswich Building Society we were able to offer him a 25 year mortgage on a part and part basis with the interest only element being supported by a savings bond as the repayment vehicle. The result is a happy customer who is still able to live in the house he s called home for many years. There are 20 million over 50s in the UK* Source: ONS-Mid 2013 Population Estimates Website: https://www.ipswich-intermediaries.co.uk Tel: 0330 123 1073 Email: bdt@ibs.co.uk 6
Our panel of specialist lenders Family Building Society About The Family Building Society doesn t believe in a one size fits all approach to lending and is happy to work with you to find the mortgage solutions for your clients regardless of their circumstances. Lending into retirement Family Building Society are committed to helping advisers who are trying to support this growing number of older borrowers and are there to support you in these conversations. They continually support the intermediary market through numerous advertising campaigns, building awareness of their unique manual underwriting approach in order to help this underserved market. Why use Family Building Society? Generous terms Will lend when other lenders still say no - they ve lent up to a 5 year term to an 89 year old and also have a maximum 16 year term for a 70 year old Flexibility - no upper age restrictions (although the max mortgage term may be limited) Will take into account income earned up to the age of 70 and pension income beyond that Accept rental and investment income that can be evidenced on an SA302. Take a look at one of our many case studies here. Website: http://intermediaries.familybuildingsociety.co.uk Tel: 01372 744155 Email: Mortgage.desk@familybsoc.co.uk 7
Other later life planning services Later Life Planning it s more than just a mortgage In most cases, later life clients both want and need full service advice, as their issues are generally not just consigned to their mortgage. By opening up discussions with your client about mortgage protection, critical illness and income protection, as well as the provision of Wills and Lasting Powers of Attorney (LPAs) it ensures you offer your clients a full, holistic later life planning service. One Family 50+ Plan Helping ensure continuity of protection into later life Many over 50s are worried about their financial future. The Guaranteed 50 Plus Life Cover product has a range of benefits to put your clients mind at rest: Quick and easy application No medical required Pays out for serious and terminal illnesses* Pay-out in just two days. There is also an extensive range of legal, health, counselling and care support services that the whole family can benefit from when the time comes. Additionally, they offer a Funeral Funding Option of 250; this isn t a funeral plan but it ensures the proceeds from the policy help pay towards your client s funeral arrangements and is completely free. *If you ve already claimed 20% for a serious illness, you ll only receive the remaining 80%. Once you have claimed for terminal illness, the policy will end and you will no longer be covered. Over half of over 50s have no life cover* Source: Mintel Whole of Life Report 2014 Website: www.onefamilyadviser.com/protection/guaranteed-50-plus-life-cover/ Tel: 0808 100 5075 Email: advisersupport@onefamily.com 8
Other later life planning services AIG Whole of Life & Care Cover Plan In the earlier stages of a person s life, life insurance and critical illness cover (often referred to as accelerated life ) are essential for ensuring financial and family protection needs. However, once the mortgage is paid off, and the term life cover has expired, the protection gap for clients in the later stages of life is often left unaddressed. AIG s Whole of Life and Care Cover with Whole of Life products can be viewed as a potential solution to this problem. While both products offer whole of life life insurance (i.e. life insurance with no end date ), each offer different solutions depending on your clients anticipated future needs. AIG Whole of Life Insurance This can contribute to funeral costs and help your clients protect their assets. By placing their policy in trust, your clients could also offset a potential Inheritance Tax liability, as the policy should not form part of their estate, although there may be a potential IHT charge when the trust has a 10-year anniversary (known as a periodic charge ) or when benefits are paid out of a trust (sometimes referred to as exit charges ) AIG Care Cover with Whole of Life This brings an added layer of protection, as it enables your customers to protect their assets in the form of whole of life cover or to receive an earlier payout if their mental or physical ability is diminished to the point of needing care. Depending on their circumstances, and whether they have chosen a joint or single life policy, your clients will either receive a full payout (for death or terminal illness) or 75% of their sum assured if they meet the criteria for care cover benefit. Examples of how a Care Cover with Whole of Life policy would work in practice can be found here. Together, AIG s Whole of Life and Care Cover with Whole of Life products can help you bridge the later life protection gap, giving your clients peace of mind and confidence that their future needs will be met without requiring a loss of financial independence. Website: www.aiglife.co.uk/intermediaries Tel: 0345 600 6829 Email: adviser@aiglife.co.uk 9
Other later life planning services The Right Will The Right Will was created for financial advisers to offer their clients a simple Will and Estate Planning Service. Your commission is all upfront and you don t need to take time out of the office to sit through a lengthy and expensive course. We work hard to make our process as simple as possible for financial advisers and are proud of the reputation we have built up over the years as a professional and friendly company. Wills & Estate Planning It is recommended that all of your clients have a Will. Without a Will, your client risks letting their estate fall into the wrong hands when they die as the laws of intestacy will decide how the estate is distributed. Without a Will: If your clients are not married, their partner will not receive anything Ex-partners could make a claim on your clients estate Children your clients have from a previous relationship may not receive anything You cannot be sure the people your client wishes to benefit would actually do so Children who are under 18 may be taken into care while the courts decide who looks after them. With the proper Will and estate planning in place, these situations can be avoided. Lasting Powers of Attorney (LPAs) An LPA allows your client to decide who will have the power to make decisions regarding their property and financial affairs as well as health and welfare on their behalf should they lose mental capacity. Without an LPA in place, should your client lose mental capacity, the power to make these decisions falls to the Local Authority. An LPA avoids this unnecessary situation from occuring. Earning potential Refer and earn up to 500 or contact us to find out more about writing the business yourself. Refer LPAs Earn 400 per couple Refer Wills Earn 100 per couple Website: www.rightwilladviser.co.uk Tel: 01564 732 740 Email: admin@therightwill.co.uk 10
Other later life planning services The Right Solicitor Limited About The Right Solicitor Limited is one of our sister companies that can act as certificate providers for LPAs and witnesses for Wills. This is a premier product with a friendly, personal service whereby the solicitors visit your clients at their home, speeding up the process and making it a lot easier for your clients. While at your clients home, The Right Solicitor Limited will: Ensure the mortgage deed and any other legal document in relation to the lending is completed Provide the certificate required for the Lasting Power of Attorney to confirm the client has capacity and an understanding of the LPA Organise for the client to sign the LPA and any attorneys. An appointment will be arranged at a time which is mutually convenient for all parties Act as a witness to any Wills. This means when The Right Solicitor Limited leaves the client s home, the legal documents in respect of the lending will be completed, the Lasting Power of Attorney will be completed and the Will signed and witnessed in accordance with the Wills Act ensuring that there are no loose ends and quickly and efficiently completing the matter. Earning potential You would earn 100 on a standard referral, and an additional 50 on a declaration of trust referral. 85% of the UK population do not have LPAs The Right Solicitor is a trading style of Poynton Law Limited. Poynton Chamber, 130 London Road South, Poynton, Cheshire, SK12 1LQ. Authorised & regulated by the Solicitors Regulation Authority under no: 638254 Website: www.therightsolicitor.net Tel: 01625 837 937 Email: admin@therightsolicitor.net Source: This is Money 11
Other later life planning services Golden Charter About If you are not talking to your clients about funeral plans and later life planning then now is the perfect opportunity for you to help your clients plan ahead and for you to secure new and additional business. Golden Charter is one of the UK s number one funeral plan providers* and more than half a million people have taken out a funeral plan with them. They work with over 3,000 independent funeral directors giving your clients the widest choice and a genuinely personal service for their families when it matters most. Easy application process A simple and short application form Your client is guaranteed to be accepted No medical questions No underwriting No GP reports required A variety of flexible payment options including regular monthly premiums and low cost monthly instalments Attractive Introducer fees** of 500 for Standard, Select and Premier Plans and 240 for the Value Plan Peace of mind with a Golden Charter Funeral Plan Very simply, a funeral plan from Golden Charter can help offer peace of mind for your clients. Because arrangements are taken care of in advance, it reduces financial stress and means there are fewer difficult decisions to face when it comes to your client s funeral. Earning potential Plans Cost to client Adviser commission Value 2895 240 Standard 3295 500 Select 3650 500 Premier 3899 500 *Based on recent market share of funeral plans sold. For details please see Funeral Planning Authority statistics 2017 at: funeralplanningauthority.co.uk/statistics and Golden Charter annual review 2016/2017 at goldencharter.co.uk **Commission payable inclusive of VAT Website: www.goldencharterintermediaries.co.uk Tel: 0800 145 6520 12
What could you earn from an average case? Let s take an example of Mr and Mrs Average Mr Average is 57 and Mrs Average is 62. They are looking at a 150,000 remortgage on their home. If you offer them the full value added service as recommended by us throughout this guide, ensuring that all of their protection needs are satisfied, you could earn: Mortgage 150,000 Broker Fee 395 Proc Fee (0.55% with Hodge Lifetime) 825 The Right Will - Will & LPA referral 500 The Right Solicitor Referral 150 Earning 1870 Other possible cover: Whole of Life with Care Cover Plan from AIG ( 150,000 sum assured) 4,330 Funeral Plan 500 Total Earning 6700 St. John s Court, 70 St Johns Close, Solihull, B93 0NH 01564 732 740 info@therightmortgage.co.uk