That is the opinion of Michael Holt, managing director of SYH Charterhouse, who offer home reversion plans but feel that there is problems with affordability for consumers. Holt claimed that there is not a lot of diligence in regard to what people can afford on variable rates as they don’t have enough choice.
He also claimed that brokers who sell equity release plans know that people who move into equity release will face an affordability issue, which is why SYH Charterhouse has introduced a discounted rental payment on its plans. As consumers take out a lifetime lease, the company is offering its plans to consumers from an age of 50.
Holt said: “There is definitely a market there but other advisors will tell people that you cannot lend to those people. Plans such as ours will allow equity to be released but pay four or five per cent on the lump sum.”
Holt also spoke on the difficulties faced by brokers when faced with upcoming treating customers fairly (TCF) initiatives. He said: “In principle it is an excellent idea but the implementation will make it more difficult for people as brokers have to provide so much paperwork to cover themselves to ensure that they stay within regulation guidelines.
“There is a big danger in equity release as people are being swamped with an inordinate amount of information, how do you find the things you are looking for in an extensive document?”
Duncan Young, managing director of Retirement Plus, said: “This seems to be about debt consolidation rather than equity release, but to allow it to as young as 50 means you are just creating problems for the future.”
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