With the evolution of the market through greater competition and with many early lifetime mortgages now coming to the end of their lock-in period, it may be in the best interests of the client to consider a remortgage.
Stuart Wilson, managing director of the Equity Release Advisory Service, explained: “If you go back to the late 1990s when rates were above 8 per cent, there is now a 25 per cent difference so it can be best advice to take a longer-term view and remortgage. It may take a couple of years to make the savings but it can work out. However, the decision is much more reliant on best advice, rather than being a rate tart like in the residential sector.”
Simon Little, senior product manager at GE Life, believed the remortgage market could take up as much as 15 per cent of equity release business in five years time but it would have to be driven by brokers.
“Remortgaging is more viable than it has been to date but it won’t be the consumer who drives the market but IFAs looking for the best deal for their clients. With some of the early lifetimes coming to the end of their five-year lock-in then you can see remortgages happening if the client has an IFA who is quick off the mark.”
However, Dean Mirfin, business development director at Key Retirement Solutions, warned there was a lot of work involved in the process.
“It’s harder to advise on than new business and we have spent months building a model for it. There is a lot more work involved than a new case and you have to see whether it’s financially viable for the client. It’s not just churning business if it’s better for the client but you have to build in the costs of switching as the maths doesn’t always work with the penalties involved.”
