We are a long way from the days when a mortgage could be secured only by a visit to the bank or building society manager, with a fingers-crossed approach from borrowers towards getting the finance they needed.
As people’s types of job and financial life changed beyond recognition, so the mortgage market had to change too, to cater for a variety of individual wants and needs rather than a homogenised version of what a typical borrower used to look like.
Out of this came the ‘specialists’, which recognised the niches that now existed and attuned their product ranges to those borrowers — whether those with adverse credit, those whose income came from a variety of sources at a variety of times, those who wanted to invest in property rather than live there, those who wanted to support others onto the ladder. And the list goes on.
Older borrowers are a customer group that isn’t going away
Today, for most UK mortgage advisers, that ‘specialist’ area of the residential market runs concurrently with the mainstream, and it’s definitely not a case of, ‘Never the twain may meet.’ Indeed, those areas brush up against each other constantly and are covered in the same manner by advisers, with the focus on delivering tailored solutions.
Later-life lending
Well, that complexity for mainstream/specialist exists for older borrowers as well. However, for them there is also the potential option of what they’re able to do with their existing asset. After all, one of those niches mentioned above was the want or need to be able to access built-up equity in a home as a solution for a variety of requirements.
And now, increasingly, we have a later-life lending market that mirrors the mainstream/specialist sectors, brushing up against them and merging into one another, needing consideration in the round to make sure all product options are actively in play.
It may feel like a large leap into the later-life lending space, but it need not be, and there is a raft of information and support available
We can also see a future in which an adviser’s ability to cover off all these areas will be pivotal to their success.
For instance, what of older-borrower couples who are getting divorced and need to access the equity in their home to buy out one partner, who then needs further mortgage finance to buy a new home?
What of a child who wants to buy a first home but doesn’t have the deposit, and whose parents want to help by accessing their equity? They will need advisers to provide both a later-life lending solution and a first-time buyer mortgage, whether something like joint borrower/sole proprietor, or a guarantor arrangement, or a developer’s specific starter-home scheme product, or any other type of initial finance.
You can see that this greater level of complexity of family life requires advisers who can work across all these areas and recommend from all the product solutions available — whether for the 30-something professional first-time buyer, the parents who are in their late fifties and want to help but currently can’t, or even the 80-something grandparents who are thinking about inheritance tax and would prefer to deliver living inheritances to their beneficiaries.
We can see a future in which an adviser’s ability to cover off all these areas will be pivotal to their success
In any of the situations outlined above, would we say that later-life lending products are the ‘last resort’ option? Undoubtedly not. And, for advisers who are already coming across this type of multi-generational/family client base, they should be able to acknowledge the growing potential for both themselves and their business if they are able to advise in all these scenarios, rather than — at worst — not even considering them, or — at best — referring on to a specialist.
To misuse a well-known phrase, this is ‘cradle to retirement’ advice. As a result, it requires — particularly mainstream — advisers to acknowledge the changing needs of their client base and how they can best service them. It may feel like a large leap into the later-life lending space, but it need not be, and there is a raft of information and support available.
Increasingly, we have a later-life lending market that mirrors the mainstream/specialist sectors
This is, after all, not a customer group that’s going away, and neither are that familial connectivity and reliance on each other.
The good news is that most clients in this space will be ones you have already serviced. They sit in your database, you see them now and you would, I hope, wish to service them throughout their life and the lives of their family members.
At all stages of their life, advice will be needed — why shouldn’t it all come from you?
Paul Glynn is chief executive of Air
This article featured in the November 2024 edition of Mortgage Strategy.
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