Any lingering fears about equity release plans appear to have been banished – most IFAs would now feel comfortable applying for such a loan themselves.
Any lingering fears about equity release plans appear to have been banished – most IFAs would now feel comfortable applying for such a loan themselves.
Eight out of 10 IFAs said they would consider taking out an equity release loan for themselves, a friend or family member, according to research published today by Norwich Union.
IFAs’ growing belief in the products reflects a broader acceptance among the public. In fact, the study found that 82% of those IFAs already selling equity release believe they will sell more this year.
Meanwhile, 72% of those not currently selling the product expect to do so within five years.
Every year thousands of Britons over 55 use equity release plans to free up the value held in their properties. And with equity-based investments having been hit by recent falls in world stock markets, Norwich Union expects more and more people to look to the equity in their home to fill gaps in their retirement finances.
The study confirmed a turnaround in the perception of equity release plans since the 1980s. At that time a lack of regulation and mis-selling by some providers caused concerns.
However, Norwich Union entered the equity release market in 1998, and since then the products on offer have been fundamentally different. They include safety features* to protect customers from the pitfalls of the past such as a "No Negative Equity Guarantee".
Also, leading lenders such as Norwich Union belong to the voluntary organisation SHIP (Safer Home Income Plans), which was set up to encourage higher standards.
Paul Stokes, head of marketing for Norwich Union Equity Release, said: "Equity release plans work well for people who want to use the value of their home to create extra cash. Since we entered the market in 1998, we always believed that it wouldn’t be too long before equity release became readily accepted by IFAs as a key part of their product mix. Given that most IFAs would now consider such a product for themselves and their families, I’d say that time has now arrived."
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Notes to editors
* Norwich Union’s "No Negative Equity Guarantee" ensures that customers will never owe more than their property is worth. We will never ask the customer or the customer’s estate to repay more than the open market value of the property.
- The survey was commissioned by Norwich Union and was carried out over the telephone during November 2002 amongst 319 IFAs.
- Sales of equity release have doubled in the last two years and the Council of Mortgage Lenders projects the market could rise to Ł50 billion by 2008.
- Minimum property values apply. Equity release is a lifetime loan secured against your home. CHECK THAT THIS MORTGAGE MEETS YOUR NEEDS IF YOU WANT TO MOVE OR YOU WANT YOUR FAMILYTO INHERIT IT. IF YOU ARE IN DOUBT, SEEK INDEPENDENT ADVICE. A personal illustration and full terms and conditions are available on request. Norwich Union equity release limited No. 3286484. Registered at 2 Rougier Street, York YO90 1UU. Not available in Northern Ireland, the Channel Islands and the Isle of Man.
- Norwich Union is the UK’s largest insurer. It is a leading provider of life, pensions and investment products and one of the leading IFA providers. IFAs provide around 70% of the company’s long- term savings business.
- Norwich Union has strategic alliances with building societies and other leading UK brand names including Tesco Personal Finance and The Royal Bank of Scotland Group.
- Norwich Union’s news releases are available on the Aviva plc website at www.aviva.com.