Skyline Magazine Winter 2021 | Page 15

www . simplybizmortgages . co . uk 15
Cost of homeowning and renting privately for 30 years
Renting privately for 30 years
Net cost £ 474,461
Equity gained £ 0
Total payments £ 474,461
Almost three-quarters of homeowners in their sixties believe owning a property brings emotional security , with that number rising to 80 % when considering financial assurances .
It ’ s a feeling shared by those in their thirties , too , with more than half insisting their retirement prospects will be better if they ’ re homeowners when they retire .
And that comes as little surprise when comparing the cost of homeownership and renting across a 30-year period .
According to recent ERC research , even taking into consideration a buyer ’ s deposit , repairs and insurance , purchasing a £ 220,000 home is likely to leave an owner more than £ 320,000 better off than someone who rents the same property over the same period – even if the property ’ s value doesn ’ t increase over the course of the three decades .
That ’ s partly due to savings made through having a mortgage versus renting , with nearly half of mortgaged homeowners agreeing they ’ re able to save more because their mortgage is cheaper than renting , but also the build-up of equity in the property through capital and interest repayments .
How do we tackle the decline of ownership opportunity ?
It could be easy to look at the current landscape and believe it ’ ll right itself at some point . Or take the stance that there ’ s very little first-time buyers can do , and accept it ’ s simply a sign of times moving on .
Yet for those struggling to get onto the property ladder , receiving a living inheritance from a parent or grandparent could provide an immediate solution .
As we ’ ve already discovered , many believe they ’ ll inherit property or money in the future , but in terms of assisting with homeownership , it may come too late . However , parents or grandparents unlocking
Saving by buying
£ 326,214 = £ 209,228 + £ 116 , 985
Paying a mortgage for 30 years
Net cost £ 148,247
Equity gained £ 209,228
Total payments £ 357,476
... parents or grandparents unlocking tax-free cash from their homes through later life lending could provide a financial boost when their family members really need it
tax-free cash from their homes through later life lending could provide a financial boost when their family members really need it .
Those in later life passing on an early inheritance is becoming more common . In fact , according to Key Equity Release , in 2020 , older homeowners released almost £ 755 million of equity from their homes in order to help younger members of their family meet a range of costs , including supporting them with an average of £ 42,500 to use for a property deposit .
Younger homeowners needing support to get onto the property ladder is also a growing trend , particularly compared to those of the previous generation . Almost half of those in their thirties who have bought their home relied on financial support from family and friends , compared with just 18 % of people in their sixties .
Those figures highlight a change in the country ’ s financial dynamic , and they ’ re also helping to transform opinion too . Amongst homeowners in their sixties , there ’ s now a growing acceptance of having a mortgage in later life , with almost a third seeing it as a way to provide money for a more comfortable later life , and the same agreeing it can provide a means to help family members .
There ’ s now also more open-mindedness to alternative financial solutions than simply selling up and moving , with less than a quarter of the same demographic stating they would insist on downsizing before securing a later life mortgage .
Through gifting a living inheritance , the older generation is now able to help their children or grandchildren counteract the growing financial imbalance and restore homeownership opportunity to their loved ones as they once had themselves . And the growing offerings within the later life lending market can ensure they do so on their own terms .
How can I help ?
For members that don ’ t advise on later life lending , Key Partnerships provides a robust referral process to help advisers broaden their advice proposition without compliance responsibility .
They also provide CII accredited wealth webinars , as well as hands-on support from dedicated account managers alongside a direct adviser-to-adviser relationship .
For every case that completes , SimplyBiz Mortgages Members will benefit from an average referral payment of £ 1,766 [ 1 ] and will be informed throughout the process from referral to completion .
To find out more on how to refer clients , visit the Simply Later Life landing page at https :// members . simplybizmortgages . co . uk / later-life / referral-partners / key-partnerships /
For SimplyBiz Mortgages Members that advise on later life lending there ’ s exclusive access to the award-winning Air platform . This will provide members with fully live rates and API integrations to the biggest lenders in the market , ensuring advisers will have the confidence to give the best advice to their clients .
To register , visit Air Sourcing through the Simply Later Life landing page and watch the training video to get started .
Here you ’ ll also have access to the Air Academy which offers marketleading accredited training support for SimplyBiz Mortgages Members looking to develop and enhance their later life lending skills .
Sources : Equity Release Council : Home advantage , Intergenerational perspectives on property wealth in later life . ONS Statistics . Key Equity Release Research .
Note 1 . Key Partnership ’ s average referral payment across the UK in 2020 .