Lenders lining up with enhanced equity release
LV= and Aviva could follow Partnership into the enhanced equity-release market after the Dilnot commission reports in July.
Last week, Partnership launched its enhanced lifetime mortgage product aimed at homeowners with health or lifestyle issues.
The product allows people with long-term illnesses, such as diabetes and cancer, as well as smokers, to secure improved terms when releasing cash from their home.
LV= and Aviva are considering launching rival enhanced equity-release products after Andrew Dilnot’s care commission issues its report next month.
LV= head of equity release Vanessa Owen says: “It is excellent to see innovation back in equity release. The Partnership proposition is clearly very attractive in the domiciliary care environment.
“We will be watching with interest and waiting to see what comes out of Dilnot.
“We will then decide what sort of innovations we might make but would not necessarily just copy what is out there.”
Aviva recently revamped its equity release offering by increasing the loan amount that can be taken up-front from 75 per cent to 100 per cent and introducing an inheritance guarantee. It has also withdrawn its lifestyle lump-sum plan.
Head of annuities Darren Dicks says: “We are looking at enhanced equity release very closely and I think there is a market there.
“If someone has a shorter life expectancy the debt is not going to accrue for a long period of time, so it could have an impact on the LTVs we could offer.”
Later Living later life planner Simon Chalk says: “Some of the big providers will be taking note because Dilnot seems as though it is going to shove the market in that direction.
“The whole issue around releasing money in later life is becoming more acute, which goes hand in glove with equity release being written on a more personal basis.”