The importance of specialist financial advice when adjusting to the new coronavirus economy
10 June 2020
Financial planning for lockdown and our post-pandemic world
The consequences of the coronavirus lockdown are far-reaching – upon individuals and families, businesses and the global economy. Big shake ups often mean big rethinks. We’ve seen it with the government rewriting the rules about acceptable levels of debt and the role of the state as safety net. The economic consequences of the lockdown are likely to lead to similar pivots for many individuals and families.
But even though a rethink in your financial planning may have been forced on you by the very sudden, very dramatic change in our social and economic landscape brought about by the coronavirus pandemic, it doesn’t mean you should react swiftly and without proper thought. In fact, the complete opposite is true; it has never been more important to get expert, honest advice to make sure any decisions you’re taking in difficult circumstances are robustly thought through and will put you in as good a position as possible in the months and years to come.
Consider all the options
If you’re having to rethink your household finances or want to help support a loved one whose circumstances have changed or secure the future of a family business, the first thing to do is to make sure you consider all the options:
- If you or a loved one has lost their job due to the pandemic, you may be eligible for benefits.
- The government has also instructed lenders to offer three-month repayment holidays to people who have lost income and are struggling to meet all their financial obligations, so take advice to see whether a break from repayments for your mortgage is a sensible option, given your personal circumstances
- It may also be prudent to remortgage to take advantage of the all-time low Bank of England base interest rate of 0.11% – but, significantly, most base-rate tracker mortgages have been withdrawn, so the rates you’re likely to be offered should be low, but may not be as low as you’re hoping for. An experienced mortgage broker will be able to guide you through the options and help you choose the most appropriate one.
- If you’re self-employed or run a business, you may be eligible for some of the grants or loans available, so again check the government’s coronavirus business support and discuss with your accountant to make sure you are accessing all support for which you qualify
The importance of expert advice
As well as looking at the official websites, it’s also vital to get expert advice from someone who can set out all your financial options and talk you through the pros and cons of each one.
We are happy to make recommendations to trusted financial advisers and wealth planners – our national network of specialist equity release advisers will be able to put you in touch with someone in your area who can give you a good overview of the financial options available to you.
We are also happy to refer to a number of trusted mortgage brokers – who share our values of putting the client first and scouring the market to find appropriate deals that match their clients’ needs – who can give you the objective information you need if you’re considering remortgaging to cut the cost of your home loan.
Looking at the whole picture: how equity release gets overlooked
One of the options that you may also want to consider is equity release, whether that’s to ease your own finances or to help loved ones or to support a family business. However, many financial advisers and mortgage brokers don’t routinely consider equity release – a way of releasing property wealth available to those aged 55 and over – within their financial planning arsenal.
A white paper by AKG (an independent organisation which offers assistance to the financial services industry), called House of the Rising Sum – Exploring equity release opportunities, found that of the mortgage brokers who completed their online survey:
- Only 23% routinely mention equity release to their clients aged 55 and over
- Only 21% always talk about it as an option
- 43% mentioned it if they identified that their client was interested in exploring it or had a need for it
- Nearly a fifth (19%) said they did not plan to offer equity release in the next year
- 11% saying they had no immediate plans but were considering options for being able to offer equity release to clients.
The role of equity release in coronavirus financial planning
“The study by AKG was conducted before the implications of Covid-19 began to be appreciated in the UK, but it was staggering even then that with more and more people entering retirement without the funds to maintain the lifestyle they want or even to meet all their bills, such a high proportion of mortgage advisers aren’t giving their clients the complete financial picture and discussing with them the role that their property equity could play within their retirement finances,” commented Jan Johnson, director of 55Plus Equity Release.
“However, it’s become even more pertinent now; with many individuals, couples, families and businesses having to shift to new financial realities it’s imperative that they’re able to consider all the potential options open to them,” she added. “Equity release is never going to be right in all circumstances, and it’s unlikely to be your first financial emergency measure, but it could be the difference between months and years of fretting and peace of mind.”
If your mortgage or financial adviser hasn’t discussed equity release with you as part of your coronavirus financial planning, our expert advisers will be happy to answer your questions to make sure you have the whole picture.