The later life lending market is continuing to evolve with new products designed to meet customer needs, according to Key Advice.
The Financial Conduct Authority’s recent Mortgage Market Discussion Paper, which closes for consultation on 19 September, stressed the importance of not creating barriers to innovation. It also encouraged lenders to feel confident in launching new offerings.
The equity release adviser said one such development is the Omni product from more2life, which offers loan-to-value ratios of up to 55.3% – higher than many existing options – and allows applications up to age 89. The product also accepts a wider range of property types, including more complex cases that previously would have been declined.
Key Advice said the innovation underlines the need for comprehensive client conversations across the advice market, from mainstream mortgage advisers to wealth managers and equity release specialists. The firm argued that considering all available options, including later life lending, can help ensure good customer outcomes.
Lifetime mortgages are also becoming more flexible, with features such as shorter early repayment charge periods and the ability to make penalty-free repayments to reduce borrowing costs. They retain the no negative equity guarantee, meaning estates are protected if the loan exceeds the property’s value.
Rachel East, senior director at Key Advice, said: “Lifetime mortgage lenders are increasingly responding to what advisers are telling them their customers need and the expansion of LTVs and broader lending criteria are top of the list.
“We have to turn away many customers who have a borrowing requirement above the maximum available, and for whom affordability barriers mean mainstream products such as RIOs and TIOs are unavailable, so innovation is helping later life lending advisers to support more older borrowers achieve good outcomes.
“It is important that mainstream mortgage advisers and other financial advisers are aware of the innovation in the later life lending sector so they can identify customers for whom these options may be appropriate and potentially refer them to a specialist.
“The FCA has made it clear that the later life lending market needs to evolve so it can help more people and lenders are responding with the innovation that delivers that. Irrespective of the scope of the advice they offer, in order to meet Consumer Duty obligations, advisers need to be having comprehensive conversations with customers on all of their options and have trusted referral relationships in place in order to deliver good outcomes.”
