The Cases You Shouldn't Write Off: A Difficult Mortgage Case Could Be A Referral Opportunity

Every mortgage adviser encounters cases that don't quite fit. Perhaps the client is approaching retirement and affordability is becoming difficult. An interest only mortgage needs repaying. The property is unusual; there's existing borrowing or perhaps another lender has already said no.

It can be tempting to conclude there isn't a solution, but for older homeowners, a difficult conventional mortgage case could be a later life lending referral opportunity.

You don't need to know whether equity release is right for the client. Recognising when specialist advice could be valuable may be enough to stop a potentially viable case being written off too soon. Here are some of the cases worth looking at again.

The interest only mortgage approaching maturity.

A client reaches the end of their interest only mortgage without the repayment vehicle they expected. Selling the property might be an option but what if they want to stay in their home?

For older homeowners with sufficient equity, later life lending could be worth exploring. Subject to eligibility and individual circumstances, a lifetime mortgage could potentially be used to repay existing secured borrowing.

Other later life mortgage options may also be available, particularly where the client has sufficient income to make ongoing payments.

The important thing is to identify these clients early. The sooner an approaching maturity is discussed, the more time they have to understand their options.

The retired client who still needs to borrow.

Retirement doesn't mean borrowing needs disappear. Clients may still want to remortgage, improve their home, move property, support their family or repay existing borrowing.

However, retirement income and the mortgage term available can sometimes make conventional borrowing more difficult.

This does not mean the client is out of options. Later-life lending includes a range of potential solutions, each with different approaches to affordability and repayments. A specialist adviser can assess the client’s income, property wealth, objectives and longer-term plans to determine what may be suitable.

The client with an unusual property.

Sometimes the client isn't the complicated part of the case; the property is.
Non-standard construction, leasehold complications, flats above commercial premises, large amounts of land, annexes or unusual locations can all make lenders look more closely at a property.

However, lender criteria can differ and a property that isn't acceptable to one provider isn't necessarily unacceptable to the entire market. The exact construction, tenure, condition and circumstances can all influence the outcome.

Before deciding that a property sounds “too unusual”, it can be worth referring the case for specialist investigation.

The client who's already been declined.

“We've tried equity release before and the lender said no.”
That's useful information, but it doesn't necessarily answer whether the client has options today. The important question is why the case was declined. Was it the property? The amount requested? An occupancy issue? Something specific to that provider's criteria?

A decline from one lender doesn't necessarily mean a decline everywhere, and circumstances and lender criteria can change. Understanding the reason behind the previous decision can help determine whether the case deserves another look.

The client with an affordability problem.

An older client may have considerable equity in their property but struggle to meet a conventional mortgage affordability assessment. That's particularly relevant as clients transition from employment into retirement and their income changes.

Where products requiring monthly payments aren't suitable, a lifetime mortgage may be one option to explore because monthly repayments aren't necessarily required. Interest can instead be added to the loan, although many plans allow voluntary repayments.

That has significant long-term implications, so specialist advice is essential. But failing a conventional affordability assessment shouldn't automatically end the conversation.

The client who doesn't want to downsize.

A client needs capital and owns a valuable home. Selling and moving somewhere cheaper may seem like the obvious answer, but what if they don't want to leave?

Their family may live nearby. The property may already suit their future needs. Or they may simply have a strong emotional connection to the home they've lived in for decades. 

Downsizing should still be considered as an alternative, but it isn't necessarily the only option. For eligible homeowners, accessing property wealth could potentially allow them to remain in their home while meeting another financial objective.

The client who wants to help their family.

Clients don't always approach advisers because they have a financial problem themselves. Sometimes they want to help someone else. They might want to give a child a house deposit or provide financial support to their grandchildren while they're still around to see the benefit.

Where much of the client's wealth is tied up in their property, this can create a later life lending conversation. However, the client's own financial security must come first. Releasing property wealth to make a gift can affect their estate, future finances and potentially their entitlement to means tested benefits.

It's therefore a conversation that deserves specialist advice.

Spot the need, then refer the case.

The key message for mortgage advisers is simple: you don't need to decide whether equity release is right for the client.

Focus on the issue the client is describing.

“My interest only mortgage is ending.”

“I can't get the mortgage term I need.”

“I need to raise some money, but I don't want to move.”

“I've already been declined.”

“I want to help my children financially.”

Those conversations could all signal a need for specialist later life lending advice.

Where the case falls outside your own proposition, referring it to Key Partnerships gives the client access to specialist advice and the opportunity to explore whether there is a suitable route forward. It means you can continue to add value to the client relationship without having to provide the specialist advice yourself, whilst they pay an average referral fee of £1,600 on completed cases.

Some cases genuinely won't work. But a case shouldn't be dismissed simply because it doesn't fit neatly into conventional mortgage criteria.

Got a case you're unsure about? Don't write it off. Refer it to Key Partnerships today and let our specialists explore the options.