Lifetime Mortgages and Property Condition

In the world of later life lending, property condition can play a major role – not only in terms of the application, but also in terms of upkeep over the duration of the plan itself.

As a result, effective conversations during the equity release advice process can potentially reduce the risk of a decline, while also ensuring that applicants are aware of their responsibilities while they are an equity release customer.

Property condition and valuations

As part of the lifetime mortgage process, the valuer will conduct an inspection of the property and grounds, to assess various aspects that may affect the property’s value or suitability. This includes its condition and whether there are any concerns such as with structural stability.
It’s important that your clients ensure all rooms are fully assessable and that keys are available for the valuer to easily gain access to the side or rear of the property, as well as to any garages or permanent outbuildings. Depending on the lenders requirements the valuer may also need to look in the roof void.
Preparing for valuation

Out of all of these, cluttered rooms can often be the main barrier to a case progressing, as it prevents the valuer from being able to accurately gauge the true condition of the property, which in turn prevents the case from proceeding to offer.
Clutter is tricky, its subjective, and what looks fine to a client might raise red flags for a valuer. One way to mitigate against the risk of a case being declined is to attempt to visit your client’s house in person – failing that, it’s worth seeing whether your client provides up to date pictures rather than simply going off what they say verbally. 

With clutter having the potential to be viewed subjectively by clients it’s important to establish the state of play ahead of valuation, as it can be frustrating to all parties to have a lifetime mortgage application submitted and a valuation instructed, only for the valuation being unable to take place to owing to the valuer being unable to accurately judge the property condition. 
Additionally, a cluttered house might suggest that the client may not take appropriate care of the property over the course of the mortgage term, creating an additional risk when it comes to selling the property to redeem the mortgage later down the track. Clutter can cover up other problems, like damp and the condition of walls)

Why property maintenance still matters after completion

It’s important to ensure your clients understand that they’ve a duty of property upkeep once their lifetime mortgage has completed, in line with the terms and conditions of their lifetime mortgage. This is crucial not only from the perspective of selling the property when it’s time to redeem the mortgage, but also if there’s a need to apply for further borrowing in the future.

Post-completion property upkeep expectations include:

• Maintaining gardens and outdoor spaces

• Keeping the property clean, hygienic, and void of clutter to avoid potential damp issues

• Maintaining external guttering and downpipes

• Maintaining fixtures and fittings

• Not making major alterations to the property without consent

What can advisers do?

During the fact find, it’s important to ensure the condition of their home early on in the lifetime mortgage process – whether this comes from in-home visits or the client providing you with pictures. 

While asking the right questions might give you an idea of the state of the property, it’s advisable to not solely go off verbal descriptions and instead seek visual confirmation before progressing the application and having it sent to valuation. 

Want to avoid valuation surprises? Start the conversation early and use our property readiness checklist to guide your next client meeting.

• Visit the property or request photos

• Discuss access for the valuer and bring up clutter and any access issues

• Ensure clients understand the upkeep responsibilities post-completion