An interview with financial adviser, Mike Jones.
Today, the Bank of Family is impossible to ignore. According to the Office for National Statistics, today’s full-time employees expect to spend around 8.3 times their annual earnings to buy a home.
And our research shows help from parents, grandparents and other family members reached £8.1bn in 2023, 77% of which went towards deposits for property purchases.
We spoke to later life lending specialist, Mike Jones, to get an adviser’s perspective on the challenges and opportunities of today’s later life lending landscape.
Mike spent 15 years working in banks before becoming a mortgage broker. After getting to grips with traditional residential mortgages, he moved into later life lending focusing on retirement interest-only mortgages (RIOs) and lifetime mortgages.
Mike, why did you get into later-life mortgages?
"In banking you’re exposed over time to the challenges older clients face, especially the lack of personal contact and tailored services. I’m a fan of giving my clients a personal service, whether that’s face to face or remote. So, I wanted to be in a position where I could really help people in this way."
What made you get qualified with equity release?
"When you think about later life lending you think of equity release products. But, with retirement starting later and the need for wider family support to get younger generations onto the property ladder, understanding the whole landscape is really important. So, being able to advise on a broader suite of products felt appropriate.
It means I have the knowledge to think more holistically about each family’s situation and what might work best for everyone. The more you understand about the different types of borrowing, at all stages of life, the more confident an adviser you will be."
How is the Bank of Family changing the later-life lending landscape?
"50 to 60 years ago people would get married, buy a house, start a family. But, today, there are other life events taking place first. Learning to drive, buying a car, going to university. All these things are additional ‘rungs on the ladder’ before you move into home ownership.
Mum and dad can’t necessarily keep providing so there’s a need for more family members to step in and help, such as grandparents. This adds another dimension to the landscape."
How can advisers better support families?
"Factoring in pensions, savings and investments is crucial. If needed, I’ll recommend specialist help from other advisers. A pensions specialist for instance. That’s something I think is important.
Understanding family dynamics as well as the mortgage market today is also advantageous, ultimately improving the advice you give. I find it a real benefit and I know my clients really trust my support. Having as much information as possible goes a long way."
What tips would you give to advisers unsure how to broach the topic of family gifting?
"Give your clients the option to meet you remotely or face to face. Not everyone will have the time for a face to face meeting, but many people will appreciate the offer and feel more comfortable talking in person.
When you’ve got your technical, fact-finding questions out of the way, put your pen down and really listen to your client. Give them your undivided attention. You’ll learn so much about their motives and why they’re looking to do what they want to do. Having a deeper, more personal insight into your client will help you do your best work."
A lifetime mortgage is for homeowners aged 50 and over. It’s a loan secured against your client’s home that enables them to release equity from their home, paying some or all of the monthly interest by Direct Debit. A lifetime mortgage is usually repaid when the last remaining borrower dies or moves into long-term care.
It’s important to make clients aware that anytime lifetime gifts may be subject to inheritance tax in the future. There may be cheaper ways to borrow money.