Even in a time of further economic uncertainty, certain truths remain. Over-65s still hold more than £2.6 trillion in real estate assets, and their mortgage burden remains at around £1.7 trillion.
The majority of over-60s believe that their mortgage options are very limited, but that belief is compounded by a prevailing marketing bias that still emphasizes equity release as the main solution. are. 
While we are used to talking about vulnerabilities when thinking about this customer group, regulators still feel that certain vulnerabilities need to be recognized and shared more broadly among professionals.
This is hampered by data protection concerns and reluctance on the part of advisors to believe that declaring vulnerabilities to lenders could influence lending decisions. There is little open discussion about how the advice process can positively or negatively impact vulnerability. This effect increases in direct relation to the customer's reduced confidence in their ability to trade.
This means that professionals in their 40s with good salaries, benefits, and savings are likely to have high confidence in their ability to trade the way they want, and are likely to use their relationships with advisors to their strengths. This means that you are more likely to approach it based on Think of your advisor as your route to getting the best deal and more.
In these cases, in most cases, either the client retains power through their choice to use a particular advisor, or it is evenly balanced and collaborative.
Next, consider the case of a widow in her 70s with limited pension income. The husband may have historically controlled the couple's finances. She likely comes into that same relationship from a place of pleading and vulnerability that is unintentionally heightened by the simple fact of entering into that relationship. In this situation, advisors are gatekeepers, rescuers, and sometimes the last hope, holding the balance of power.
This is a fundamental principle of power dynamics that exists in all relationships, and it is the responsibility of advisors to recognize this and recognize their role in reducing or increasing imbalances.
By focusing on the client's desired outcome or pain points and explaining the range of products available in clear, plain English, you give the power back to the client and ensure that the client is confident in what their preferred approach is. You can make your point. For trading. This makes the process more like a collaborative problem-solving conversation than a prescriptive product recommendation from a siled, limited selection.
strategic advice
Every week we see evidence that late-life financing has been treated as a one-off transaction for many years, with clients who took equity release perhaps 20 years ago and were never reviewed. Mortgages should not be treated as a 'fit and forget' solution. This is especially true for mortgages aimed at older customers, where the “what if” risks of youth are becoming inevitable “when” risks as the population ages.
While it is becoming easier for people in their 60s to re-enter an interest-only mortgage from a technical perspective, it can be potentially harmful if handled individually. You still have debt, so you need a clear strategy to reduce and pay it off.
Perhaps the strategy is to take out a retirement interest-only mortgage with no end date and then repay the debt through real estate sold upon death, but it is unusual for a customer to end up in default with an RIO. Not. The belief that the product cannot be changed.
This effect could be as simple as not seeking a better interest rate, or the surviving partner may feel that the only option is to continue making payments despite lower-than-expected incomes in later life. It may be more serious in that there are
The simple practice of talking to clients about “what if,” “when,” and “what's next” can inform the advice being given now and improve outcomes in the future.
Protection is not always available for older clients due to health and other factors. But as such, a strategic approach to advising a client over a lifetime provides a degree of protection, flexibility, and can provide improved results. In the long run. This may include conversations about harsh realities, such as the need to reduce or reduce your mortgage balance over a mutually agreed period of time to keep debt levels manageable and sustainable in retirement. there is.
IFAs have long been accustomed to dealing with customers over long lifecycles and are committed to helping mortgage advisers and lenders innovate in a way that fosters long-term mortgage relationships where fair billing and a lifetime approach benefit both parties. It would be good to see.
Siled advice vs. holistic advice
There's been a lot of discussion lately about the need for holistic advice rather than outdated, siled approaches, and this is all to the good. If a customer qualifies for a RIO, how can they be sure they don't qualify for a mainstream mortgage with a higher maximum age limit if these tools aren't in place?
A holistic approach also allows for a more dynamic approach to advice, which is currently being seen in the divergence between swap curves and gold yield curves. This could result in the task of advising clients on a two-step process using, for example, limited-term interest-only products, used as a step before accessing lifetime mortgages or other long-term solutions. There is.
Not only is this approach likely to yield better results for the client (if based on solid research), it also naturally lengthens the relationship cycle and increases the likelihood that the advisor will retain the client for future transactions. will be higher.
product innovation
Compared to the traditional mortgage market, innovation is evident in the late-life space, with more lenders offering more flexibility in terms of interest repayments and prepayment fees.
For example, more2life recently launched its Maxi Zero ERC product, the first lifetime mortgage with no early repayment fees, despite the hefty origination fees.
As in all areas of the market, clients may need short-term solutions rather than solutions that look to the rest of their lives. Products like this and more2life's APEX plan can help you meet your short-term needs without resorting to potential means. This is a riskier route than a bridge loan.
There are often challenges when it comes to probate, downsizing, and creating the breathing space you need, and new products like this are invaluable in finding solutions, but increased flexibility means increased fees. often requires careful management and often requires a time-bound plan to provide an exit route. .
Perhaps the most interesting innovations in the industry are coming from lenders like LiveMore and Perenna, which are blurring the line between traditional lending and retirement lending.
This is often the best common sense financing that takes into account the complexity of income that comes from intergenerational and lifelong income.
Ultimately, those 55 and older are the most credit-worthy sector of the population, with an average credit score of 863, meaning they have a lower risk of default and greater confidence in stocks.
Rather, there are very few lenders and advice firms that appear committed to this challenging but rewarding area of the market, where clients still value advice and personal relationships with the people offering them advice. It's actually surprising how little there is.
Dan Osman is head of mortgages for over 60s at Moneyman UK.
