Almost every business has been affected by the coronavirus lockdown in some way, so we understand that you have questions about how this has impacted the equity release industry.
Rest assured, Equity Release Supermarket is running as normal and you can still release equity in your home through us. However, we have modified and enhanced some of our processes since lockdown, so that we are able to continue offering the same first-class services.
Continue reading, below, to find out the changes we have made and how these could affect you.
A new approach to appointments
Prior to the pandemic, face-to-face appointments were available. These gave our customers the chance to speak directly with their adviser, ask their questions and understand how equity release could help them enjoy financial freedom.
Of course, social distancing has meant this way of working isn’t viable at the moment. However, rather than postpone face to face appointments, we decided to move them online.
For those wanting to ‘meet’ their adviser, we recently introduced our video chat facility - a first for the equity release industry. With this technology, Equity Release Supermarket are now able to offer ‘remote meetings’ that function much in the same way as our face-to-face ones.
Our customers are able to ask their questions and our advisers can guide them through the equity release process – with both parties gaining that all-important human interaction during lockdown.
Mark Gregory, Founder & CEO of Equity Release Supermarket, regards this a natural transition, given today’s digital-first trends, “We knew that many of our customers already preferred to use remote channels, with 40% of our advice being conducted by telephone alone in 2019.”
Even as we look beyond this pandemic, video meetings will continue to be available and remain a feature of the Equity Release Supermarket process.
Sorting out the finer details
The introduction of remote meetings offers our customers additional reassurance during these difficult times, while the rest of the advice process has remained the same at Equity Release Supermarket.
We continue to email and post documents as normal. We are also continuing to place all documents in the customer’s personal and secure online portal, which can be accessed at any time. It’s also a simple and convenient way for our customers to track the progress of their applications.
Lenders and solicitors have adapted
The valuation of your property is one of the factors lenders use when deciding how much money they’ll lend you and your solicitor is vital to ensure that the legal side of equity release is taken care of.
Both of these important aspects of the equity release process have been affected by social distancing measures.
A surveyor is not able to visit your property at the moment and the equity release industry initially stalled as lenders and funders adapted to the changes required to continue with the application process.
However, many lenders quickly implemented solutions to overcome the need for immediate physical valuations and agreed an interim process to allow applications to progress, via a semi-automated valuation process.
Lenders are taking different approaches to conducting surveys and most are using teams of independent surveyors, providing ‘desktop valuations’ whereby they can access over 20 data points that are openly available on the property (e.g. Google earth/street map etc) and also using data from nearby properties that have previously sold.
Once the valuation has been completed, dependent upon the product, each lender has revised their underwriting criteria. Some lenders have reduced their standard loan-to-values to accommodate the additional risk of desktop valuations. Others will apply a ‘haircut’ to the valuation – for instance, Legal & General will only use 95% of the valuation figure for calculation purposes. In other scenarios lenders may hold back up to 10-25% of the loan applied for and release the remainder once a satisfactory physical valuation has taken place.
Similarly, a face-to-face meeting with your solicitor is normally one of the requirements of the Equity Release Council. However, in these difficult times, the Council has temporarily waived the necessity for the solicitor to be the one to witness the mortgage deed.
Your solicitor will ensure you are still provided with the necessary legal advice and you will now be given the choice to receive their advice over the telephone, by video calls or as done previously - face-to-face, once social distancing restrictions have been lifted. Your mortgage deed can now be witnessed by an independent person, under social distancing conditions and your solicitor will work with you to provide you with the best solution for your personal circumstances.
At Equity Release Supermarket, we pride ourselves on looking after our customers’ best interests. So, if you are not happy with the terms and conditions within the lender’s offer, you can always put your application on hold and return to it at a later date, once the market normalises and physical valuations resume. Alternatively, we can look to another lender for a solution (as we advise on the whole of the market), with most offering free valuations.
The current state of the market
Now you know that Equity Release Supermarket continue to operate effectively during lockdown, the question still remains; is now a good time to release equity?
Well, with current market conditions, there really hasn’t been a better time.
According to the Equity Release Council’s Spring 2020 Market Report, average equity release rates fell to a record low of 4.48% last year. For context, the average standard variable rate (SVR) of the six top high street banks is currently 3.54% - which narrows the margin between lifetime mortgage rates and standard residential mortgage rates to less than 1%.
For our customers, these all-time low interest rates could make borrowing more affordable over time.
For example, with record numbers of plans offering interest only and additional overpayment options, we are seeing many younger borrowers using these features of lifetime mortgages as a solution to continuing their existing residential mortgage into retirement.
As a result of these favourable terms, Equity Release Supermarket has seen a sustained number of equity release enquiries year-on-year. This speaks volumes to the strength of the equity release market and Equity Release Supermarket’s reputation and ability to adapt, even during these unprecedented times.