Georgina Smith, managing director of OneFamily Lifetime Mortgages, said “it would be wrong for IFAs and brokers to ignore innovation in the lifetime mortgage market”.
Mortgage brokers who fail to advise on lifetime mortgages are letting clients down and missing out on 2.5% commissions.
Georgina Smith, managing director of OneFamily Lifetime Mortgages, said “it would be wrong for IFAs and brokers to ignore innovation in the lifetime mortgage market” and urged more advisers to consider equity release as a practical option for older borrowers who don’t want to downsize.
She said: “Part of the problem is that brokers advising on mortgages don’t always have permissions to advise on lifetime mortgages.
“Similarly, IFAs advising on retirement income don’t usually have permissions to advise on equity release.
“This is a real regulatory sticking point and it means that customers are losing out. Advisers will often not see a solution for them and will turn them away when residential lenders can’t help them.
“But the reality is that there are hundreds of thousands of borrowers who could be helped by switching from an interest-only mortgage to a lifetime mortgage with monthly repayments.”
Smith added that many brokers overlook lifetime mortgages because they don’t advise on the sector but commissions, despite the average loan size being smaller, were much higher than on traditional mortgages.
She said: “Not only is the customer being left to fend for themselves, often without even a basic knowledge that they need to seek out an equity release specialist, mortgage brokers are actually losing out on procuration fees too.
“The situation as it stands is untenable in my opinion.”
OneFamily is planning to launch a variable interest rate in the coming weeks.
Smith added: “This will be more on a par with a mainstream mortgage. Even more reason why advisers should be looking at these types of mortgages alongside the traditional mainstream ones.”
Mark Lambert, principal of Viva Retirement Solutions, agreed and said regulation has to change if there is to be a real shift in adviser behaviour.
He called on the Financial Conduct Authority to consider amending the rules to force advisers to consider lifetime mortgages alongside residential remortgages.
He said: “Lifetime mortgages offer a real solution to many older borrowers and these are often overlooked by mortgage brokers.
“A change in regulation, much the same as what has happened with second charges under the Mortgage Credit Directive, would force mortgage brokers to seriously understand and consider lifetime mortgages for their older clients.
“If the industry is really putting the client at the heart of the advice they are giving they need to be considering all of the available options to the client, including lifetime mortgages.”
The FCA declined to comment.
