Hodge Lifetime explains the importance of understanding equity release

Managing director at Hodge Lifetime, Jon King, believes half the battle when it comes to equity release is understanding exactly what’s involved.

Mr King told Mortgage Strategy that the equity release market is often compared with the mainstream mortgage sector, but that there is a fundamental difference between the two.

The difference is that many more equity release products are sold via brokers than other mortgage products. Mr King claims almost 80% of equity release products sold during the first quarter were sold via brokers. Meanwhile, fewer than half the new mortgage products on offer are available via brokers.

The reason for this, he believes, is that equity release trade body Safe Home Income Plans (SHIP) requires its clients to seek financial advice before taking out an equity release plan.

“This has the benefit of ensuring that clients and their families understand the transaction, and contributes to the low complaint numbers in this product area,” Mr King says. He believes this could be one reason why the equity release market has contracted at a much slower rate than the mainstream sector since the start of the global economic downturn.