SHIP has been lobbying to raise the minimum levels to make sure equity release clients’ state benefits are safe; while the capital disregard sits at £6,000, any drawdown scheme set at a minimum of £10,000 jeopardises the legitimacy of the borrower’s benefit claims.
But now the Budget has raised the minimum as of November, SHIP says no benefits will be at risk and equity release drawdown products become all the more enticing to elderly borrowers.
SHIP director-general Andrea Rozario says: “Previously advisers were worried about explaining the risks of drawdown, it made it a riskier product for borrowers who rely on state benefits. There were loopholes round the problem, but these were complicated and lengthy.”
Rozario says SHIP is delighted the Government has made this decision and says it was wholly unexpected.
“Now, with the capital disregard soon to be raised, no one’s benefits will be at risk when they take out tranches of £10,000. This will have a huge, positive impact on the equity release sector,” she says.