Equity release industry trade body Ship has been campaigning for greater clarification of the relationship between equity release and state benefits.
Andrea Rozario, director general of Ship, said: “Customers might well be missing out on benefits or the help afforded by equity release because they are unsure of the way the two interact.
“However it is often the case that customers’ benefits are not impacted by their taking equity release.”
As releasing equity from the home can affect the homeowners state benefits, LV’s Ms Owen said a state benefit calculation systems such as Fintel or Equibius should be used to assess how much clients are entitled to.
This will be particularly useful as it will enable the adviser to see the impact equity release could have on their clients’ state benefit entitlement, she said.
2) “Have you considered alternatives to equity release?” According to Andrea Rozario, director general of Ship, these might include looking at savings or downsizing their property.
Equity release is definitely an option for many people looking to boost a retirement income and Ms Rozario said every option must be considered.
3) “Have you spoken to your family?” – Ship encourages all customers to involve their family in the decision about whether or not to release the equity from their home.
An adviser should consider that some families may prefer to support their parents financially; however Ms Rozario said this was not always possible and could come with its own difficulties.
4) “What do you intend to use the cash you release for?”
The answer to this question might affect the type of product that would best suit their needs, according to Ms Rozario, and in some cases with particularly vulnerable customers an adviser asking what they are looking to use the money for could head off any pressure from other sources that the customer may be under to take out equity release.
It is important to ask the reason why they need to release money from the property, Vanessa Owen, head of equity release at LV, said so that you can assess whether equity release is the right financial solution of if the money could be more suitably obtained elsewhere.
For example if they wish to repay debts it is important to understand how the debts built up in the first place to ensure if they take equity release the debts aren’t just going to build up again.
If it is for home improvements or adaptations, they may wish to see if they can secure a grant or charitable support instead.
5) “Are you intending to use your home as a form of inheritance?” – Releasing the equity in a home will diminish the amount that is left to pass onto family, Ms Rozario noted, which some people will be reluctant to do.
On the other hand, Ms Rozario said it may be that the homeowner is taking out equity release to help other family members in the first place.
Clients need to consider whether they would like to leave an inheritance, whether anyone other than the client lives in the property and, if they are dependent, what arrangements are in place for their care if the clients die or move into long term care, according to LV’s Ms Owen.
For this and other reasons, where possible, Ms Owen said it is best if the family is engaged in the equity release process.
6) “Do you have any underlying health conditions, and what is your family’s longevity history?” – Those with health conditions might be suited to specific products such as an impaired health equity release plan.
Ms Rozario said this question allows an adviser to identify people with health issues that may allow them to raise more money when releasing cash from their home.
