A historic period for retirement planning
The later life lending sector has never been as diverse as it is today. New products are frequently entering the market, and current products are being developed to better suit the needs of those in or nearing retirement. In order to offer a more holistic financial advice service, more advisers than ever are engaging with the later life lending sector.
Debt held by retirees to dramatically increase
Indeed, research commissioned this year by more2life with Cebr (Centre for Economics and Business Research) painted a clear picture of rising debt levels and lower income streams among retirees, proving that more financial advisers need to ensure they are operating in this sector. Forecasts suggest that by 2029, the total value of debt for people aged 55+ will reach a staggering £548 billion.
While more older people are carrying debt into their retirement as part of a deliberate strategy, more are doing so to simply make ends meet. The report shows that income levels are continuing to fall with age, with many 65-74 year olds estimated to have just £3,100 left at end of the year to save, invest, or use for future spending, and almost half of over-55s (48%) believe that they do not have enough savings to cover an unexpected £5,000 bill.
The retirement landscape is changing; people are spending longer in retirement than ever, and with this in mind, it is clear that more needs to be done to educate consumers that changing products to suit their needs are available.
Record-breaking rates and choice
In August 2019, lifetime mortgage interest rates dropped below 3% (MER) for the first time in history, and there are now around 300 lifetime mortgages available. In fact, with rates below 3%, it would take 20 years for a client’s debt to double in size, compared to the typical average of 10 years. Loan-to-values are now available from the very low (5%) to the very high (56%) to suit clients with a range of required loan amounts and house values. In fact, this range of rate and LTV availability doesn’t just sit across the market, but with more 2 life alone. The breadth of choice offered with more2life plans also doesn’t just stop at rate and LTVs, but also includes additional features and protections.
Partial repayments are now available on every more2life plan. This comes after the market-wide research undertaken by Cebr made explicitly clear the unpredictability of modern retirement, and after surveying a sample of over 170 advisers who stated they would like to see more plans offer the feature. Partial repayments ensure clients have the freedom to repay as and when they need to, and control in the ability to reduce their loan size and therefore the effect of roll-up interest. Fixed ERCs also provide transparency and peace of mind in giving clients the ability to properly assess the financial repercussions of potentially incurring an ERC.
Other features we offer across our product range include inheritance protection, downsizing protection and ERC exemptions for the remaining applicant in joint cases where one applicant passes away or goes into long-term care. We also offer cashback deals and valuation and arrangement fee-free deals with selected products, so clients can make the most out of the money released from their homes.
With more choice and competitive rates offered across the more2life product range than ever before, there’s never been a better time to offer a more2life plan to your eligible clients.