The survey also revealed that 60% of customers use some or all of the money released from the equity in their property toward home improvements, which supports the view that they intend to continue living in their home for as long as possible.
Mortgage Express – which now has over 35% of intermediary lifetime sales - carried out the research with lifetime customers to gain a better understanding of their funding needs, to identify areas for future product improvements and to provide better service.
Other key findings from the research include:
The research showed that customers often used the money for more than one thing: 60% said they used it on home improvements and a further 16% said they gave the money to family members to buy a home.
8% of respondents used some or all of the money to pay off an existing mortgage, which suggests that a number of customers are using lifetime funds to meet the shortfall in their residential mortgage. Clearly, a number of older people do not have adequate means in place to repay their loan at the end of the mortgage term, and this figure may well increase in the future.
21% of respondents said they initially found out about lifetime mortgages from family or friends, and 23% from their financial adviser. The remaining respondents had found out about the product through a combination of television advertisements, internet searches, newspapers and direct mailings. No single source of equity release information appears to be dominant, but a combination of direct marketing and word-of-mouth appears to be an effective way to communication to customers.
Industry trade body, Safe Home Income Plans (SHIP), requires lenders who are members to encourage customers to discuss their lifetime mortgage with their family. 88% of respondents in this survey had indeed consulted their family before taking out their lifetime mortgage. The fact that so many lifetime customers have consulted with their families is a further safeguard against any future mis-selling allegations by disgruntled family members.
When asked to rank the two most important features of their lifetime mortgage, 83% of respondents said that loan-to-values were vital or important, and 80% said that the interest rate on a product was vital or important. This suggests that a large number of customers want to release as much equity in their home as possible, at a competitive rate.
78% of respondents said it was likely that they would want to borrow money in the future. 85% of respondents have no plans to move home in the future. This indicates that, for the bulk of lifetime customers, downsizing to a smaller property is not part of their plans. Lifetime customers are clearly attached to their homes, and that the basis for lifetime mortgages – that older people want to release funds while remaining in the family home – remains sound.
92% of respondents said that they were satisfied with the service they received from their IFA or mortgage intermediary. Positively, 96% said they would recommend lifetime products to family or friends, which bodes well for the future growth of this specialist product.
Roger Hillier, product development manager at Mortgage Express, said: ‘‘We now have an even clearer picture of the lifetime market. The research confirms that our lifetime mortgages and the processes that support them are working well’’.
‘‘We were pleased to find that so many lifetime customers are discussing their decision with family, and their experience is such that the overwhelming majority would recommend these product to family or friends’’ he added.
