Releasing potential: how to solve interest-only?

Equity release can provide an ideal solution for borrowers in an interest-only trap, but for many customers, fear of the unknown is curbing enthusiasm.

With massive inflation in house prices over the past twenty years, this generation of retirees has a wealth of potential cash sitting in their property. Equity release can help homeowners overcome shrinking savings pots with access to funds tied up in their home without the hassle of moving, and for interest-only mortgage borrowers it can help pay off remaining capital on their mortgages.

Interest-only presents a massive opportunity for brokers to utilise and promote equity release as a sensible solution to clear remaining debts.  However, a lack of client knowledge about releasing equity requires brokers to put in more time than with other more orthodox solutions. This is necessary to ensure customers have a thorough understanding of what equity release can offer, and brokers must be proactive approach with their clients. The reward for this hard work is the opening of new revenue streams.  

However, while interest-only is a big opportunity for the equity release market, it's also a significant challenge. The sector needs to encourage regulator and Government support, and dispel any lingering myths about risk and reputation. Lenders can position equity release alongside downsizing - an alternative that allows them to keep their home, while giving them access to similar quantities of cash. Expert advice and provision of information are vital to this process.

 

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