Qualified advisers will be needed to advise older homeowners on the benefits of proposed deferred payment schemes from the Council versus options such as equity release, Baroness Greengross has said.
The proposed deferred payments scheme, possibly to be outlined in March’s Care Bill, would allow elderly people to borrow cash from councils to pay for care to eventually be recovered through the sale of the house.
Greengross, who is chief executive of the International Longevity Centre and vice president of the Local Government Assocation, said if the schemes are unregulated financial products they could conflict with advised and regulated equity release products.
She highlighted the importance of qualified advice for elderly homeowners in this position. “We just have to be very careful people are well advised and therefore that we have qualified advisers,” she told Mortgage Solutions.
“The most important thing is in later life advice is qualified and that we understand the difference. The local authority tells you where to go, it doesn’t give you advice.”
Greengross was speaking at the launch of an Oxford Economics report commissioned by Just Retirement, which found 1,090,000 pensioner households could be lifted out of relative poverty a year between 2012 and 2040 if uptake of equity release products widened.
Just Retirement group's external affairs and customer insight director Stephen Lowe highlighted the number of Brits approaching retirement with outstanding mortgage balances.
“In cases where customers are left with an outstanding debt an increasing number of people are turning to equity release as a lifeboat, to help them remove one mortgage stream with another which gives them a different kind of peace of mind,” he said.
Financial Services Consumer Panel member Theresa Fritz said equity release was a “nice, cosy term” but many elderly homeowners were worried about the impact of taking out a second mortgage with high rates after spending most of their working life paying off the first.
“They are worried about spending too much of their equity too early on. This market will not move forward until the industry comes forward with more better value for money products,” she said.
