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Just Group plc
1 June 2011

Innovative new equity release lifetime mortgage from PARTNERSHIP aimed at cash poor homeowners with health or lifestyle issues

Innovative new equity release lifetime mortgage from PARTNERSHIP aimed at cash poor homeowners with health or lifestyle issues

  • No negative equity guarantee
  • New product specifically designed for homeowners with health issues
  • Available to over 60s with homes worth at least £70k Up to 40 per cent of all those who qualify for equity release could benefit from declaring health issues
  • Completely free to entry – no valuation, application or completion fees
  • A MAJOR NEW EQUITY RELEASE product only available to homeowners with health or lifestyle factors is launched today by specialist retirement solutions provider Partnership.

The ENHANCED LIFETIME MORTGAGE product is available to property owners aged 60 and over whose property is worth at least £70,000.

It will offer enhanced benefits to those who suffer from long term illnesses such as diabetes, cancer or high blood pressure – smokers will also be able to secure better terms with this innovative new product.

Minimum cash release for the mortgage is £25,000, and Partnership will not charge homeowners a fee for valuation, application or completion when they take out this product. This free to enter proposition is a unique feature of Partnership’s product, maximising benefits to customers who will typically be asset rich and cash poor and at the same time removing concerns amongst those consumers about committing funds to equity release if they do not choose to take it up.

There is a fixed annual equivalent interest rate, which is currently set at 7.65%. The overall cost for comparison is 7.7% APR (typical).

In order to reassure homeowners in today’s property market, Partnership includes a No Negative Equity Guarantee as standard with The Enhanced Lifetime Mortgage, which will allay client fears about taking out an equity release mortgage on a property which then becomes worth less than the value of the mortgage.

Inheritance Protection can be assured, where the homeowner draws less than the maximum cash – so those named in the homeowner’s estate can be sure they will benefit.

Ged Hosty, Managing Director, Equity Release, Partnership said there was a need in the market for innovation to stimulate growth after a period of falling sales:

“We already know that equity release provides a much needed source of income for people in retirement who find themselves without adequate pension provision but have substantial equity in their properties.

“Now Partnership has refined this exceptional new product to benefit those with compromised health conditions” said Hosty.

“The Enhanced Lifetime Mortgage will provide exceptional terms for homeowners with qualifying conditions or circumstances – smokers for example – and a simplified underwriting process means that a short list of medical questions can be completed online in minutes to confirm eligibility,” he added.

According to research for PICA (by think tank Oxford Economics and the ONS) 23% of pensioners – or 2.5 million people – now officially live out an impoverished retirement. Equity release provides one of the few ways to improve their quality of living.

“During the credit crisis we saw many more people using their equity release to pay off their debts, and this is a trend that is continuing,” said Hosty.

“We also see more people using this income to help their families.

“As many younger people are increasingly facing unprecedented debt and have to meet the costs of funding their university education or getting on the housing ladder, pensioners who can access this income clearly feel they can play a useful role to help their families,” he added.

But the most popular use of funds from equity release is to meet the costs of projects which need a lot of capital - whether it is building a new conservatory, bathroom or kitchen or to make a garden more manageable, said Hosty.

While the equity release market is a mature one, Partnership research reveals that there is a significant market for those with health and lifestyle issues, which could affect up to 40% of people who apply for products.

Key drivers for equity release – the market in June 2011

  • The market and consumer fundamentals will be the drivers for the growth of equity release.
  • The ageing population is living longer (with the oldest cohorts growing fastest) The number of people aged over 85 is now set to increase by over 60% in the next 20 years and the number aged over 75 will increase by around 70% in the same time period (source: Laing and Buisson 2009). Many find themselves with inadequate pension provision but have significant housing equity.
  • Equity Release has the potential to close the retirement planning gap for those people who are asset rich but cash poor.
  • Research conducted for PICA (by think tank Oxford Economics and the ONS) reveals that 23% of pensioners – or 2.5 million people – now officially live out an impoverished retirement. However people aged over 65 collectively own property worth £765.18 bn on which they do not have a mortgage (Key Retirement Solutions – based on analysis of ONS and Land Registry Data, 2010).

Why equity release is a sound option for property rich, cash poor homeowners:

SHIP (Safe Home Income Plans) – SHIP is a voluntary trade body which represents the majority of the equity release market in terms of volume and its members include the leading providers of lifetime mortgages and home reversion plans.

Partnership, as a member, observes the SHIP code of conduct which offers consumers the following protections and safeguards: this means -

No negative equity guarantee, requirement for independent legal advice, consumer can move house and transfer mortgage without penalty, fully advised sale process to guide the consumer through. (

Can provide significant additional cash for those necessities or additional luxuries which make life worth living – with no repayments during their lifetime.

Unlock value in the home. Many homes have seen record house price growth over the last decades while many pensioners are cash poor.

Care Costs at Home. Equity Release provides a great way for people to stay in their own home but meet the additional costs of funding care provision in your own house (known as Domiciliary Care).

“There are advantages and disadvantages in all types of plans, so it is important for people to find out as much as they can and if possible talk it over with their family. It is essential that they get independent financial advice,” said Ged Hosty.

“But our research has identified that around 40 per cent of all applicants for an equity release mortgage could qualify for enhanced terms because of medical factors, and right now there is nothing else in the UK market offering the outstanding benefits that Partnership’s product offers.”


Notes on equity release

Types of Health condition which might benefit from Partnership’s Equity Release product:

  • 13% of men and 12% of women aged 60+ smoke (according to a General Lifestyle Survey 2008: Smoking and drinking among adults, 2008)

Health Survey for England 2008 (65 – 74 year old men and women)

  • Obesity – 33% are obese
  • High Blood Pressure – 61% have high blood pressure
  • Diabetes (Doctor diagnosed) – 15.7% for men, 10.4% for women

High Cholesterol (Heartstats, Stroke statistics 2009) Age 65-74

  • 54% of men and 76% of women in this age group have high cholesterol

Trends: (All data based on Key Retirement Solutions Market Monitors Q1 2010* ( )

Home and garden improvements remain the most popular use of funds released through equity release schemes, with 58% choosing to release cash for those projects which require considerable capital outlay, for example a new kitchen, bathroom or conservatory and for many equity release provides the opportunity to make the garden more manageable.

Retired homeowners are increasingly using ER to help family. This was the 2nd most popular use of the cash released. It found money is increasingly being used to help or treat family and friends – 35% of retired homeowners took cash to help family in the three months compared with just 19% in 2009.

Repaying debt amongst pensioners with 23% of over-65s releasing equity to pay off non-mortgage debt while 17% used it to pay off an existing mortgage.

What people are buying – according to Key Retirement Solutions – Market Monitor, correct at December 2010*

Total no of ER plans rose by 3.6% in 2010 with drawdown or one-off lump sums accounting for 74% of the growth in the UK.

Total number of new plans rose for the first time since 2007 to 22,020 compared with 21,305 in 2009.

Lump sum lifetime mortgages made up 23% of sales in 2010 compared with 33% in 2009.

Reversions remained steady at 3% of total sales.

Drawdown accounted for 74% compared with 64% in 2009.

Outlook for the market
The industry is optimistic about the market. The 6th annual SHIP members’ survey reveals a positive forecast for the coming year, with members predicting new entrants (60%) and market growth (67%).

75% believe the market can withstand further economic pressures and remain at least at the same levels.

Strength of ER. The sector’s ability to fulfill a growing consumer need (75%) and meet changing retirement requirements (38%) were highlighted as two of its key strengths.
 Engagement with Government. There is far greater engagement between the ER industry and Government than ever before, and members believe this will continue over the course of the year (80%).

Solutions to Government’s public policy issues e.g. meeting pensions’ gap and care. 60% of respondents believe that the Government will look to the industry for help with public policy issues such as meeting the pension’s gap and funding care.

Types of equity release:

Lifetime mortgage - involves you taking a type of mortgage which you don’t pay back each month. The borrower retains ownership of the home and interest on the loan is rolled up.
The loan and rolled up interest is repaid by your estate, when you, or if you are a couple the last person, either dies or moves into long term care. You can choose to have the facility to increase the amount you have borrowed as and when you like up to the limit agreed with the plan provider. You can also elect to protect some of the value of your property as an inheritance for your children.

Drawdown Lifetime Mortgages - The main difference with a drawdown mortgage is that you don’t request the full sum of money available to you immediately. Instead, you decide on a maximum amount of equity you want to release, and ‘draw down’ the cash in stages when you want to.

Home Reversion Plan - With this type of plan you can sell all or a percentage of your property with the right to remain in your property, rent free, for the rest of your life, or until you move into long term care. As you do not pay any monthly rent you receive less than the full market value of your property and the amount you receive will vary depending on your age, the value of your property and your health. There are many different types of plans available and it is important that your current and future needs are matched to the right type of equity release plan, which a qualified adviser can help you with.

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