Later life lender's research reveals why some cases fall through
As more customers turn to equity release for support with their later life finance, more2life conducted a study to determine why some cases were declined during the first three months of the year.
While most of equity release cases proceed from application to completion, others are declined due to underwriting criteria, and the biggest reason, according to the later life lender’s research, was the property failing to meet the minimum or maximum value criteria, or the borrower wanted to release a higher LTV than was possible.
more2life noted that this was particularly true of those seeking to rebroke or looking for further advances based on estimated rather than confirmed property values.
“Advisers are the vital link between older homeowners and lenders, so we were keen to share this data to help them better manage clients’ expectations,” said Ben Waugh (pictured), managing director at more2life. “No provider likes to say ‘no’ and by highlighting the impact issues such as clutter, flood risk, and proximity to commercial property can have on an application, advisers will be able to have more open conversations with clients and ultimately choose a lender who is happy to say ‘yes’.
Flood risk, proximity to commercial property, the home needing significant repairs, and single-skin construction were also among the top five reasons that cases were declined. These were the same five reasons as in Q1 2022, although ‘proximity to commercial property’ has fallen from being the top reason to third, while ‘failing to meet the value criteria’ has risen to the top from fifth a year ago.
“With six different funders who each have different underwriting criteria, more2life is ideally placed to support as many customers as possible,” Waugh said. “We are one of the few lenders which will accept spray foam in limited circumstances, and our teams are happy to have discussions with advisers as part of the application process to understand what is possible.”
He added that the current market volatility made it even more important for advisers to have these conversations with their clients as part of the initial meeting and ensure that when they do submit an application, there is a better chance of it completing successfully.
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