The equity release industry is continually striving to develop new ways of helping homeowners age 55+ to release equity from their property. Equity Release Supermarket in partnership with LiveMore now have a solution for those looking to take equity release and who currently have spray foam insulation in the roof of their property.
Equity Release Underwriting Rationale
Frustratingly, for many years the equity release underwriting process on property criteria has been restricted by lenders and their inflexible attitude compared to the mainstream mortgage market.
Lifetime mortgages which are the most popular form of equity release mortgage have long been considered a one-stop transaction due to the potential longevity of the plan term - which runs for the length of the youngest homeowner’s lifetime.
For this very reason equity release providers have always been protective over the property criteria they would lend upon – using the scenario that someone releasing equity at age 60 could hold the plan for over 25 years and how would the condition of the property be maintained during that period.
However, with the many improvements to their intrinsic features and usage, the average equity release plan actually only runs for 15 years before its repaid – that’s upon death, long term care or early repayment
Now consider a mainstream residential mortgage. These are typically arranged with a term of 25 years; in fact the term could be even longer with the younger generation stretching to new 30-year highs. However, we don’t see the same level of scrutiny with underwriting a residential property as we do with a lifetime mortgage – in fact, many valuations for residential mortgages are even conducted by drive-by valuations.
A New Approach from LiveMore
Livemore, who specialise in mortgages for the 50-90 age group, started lending in 2020 and was one of the prominent Retirement Interest Only Mortgage (RIO) adversaries. Since then Livemore now lends on Term Interest Only and Capital and Interest mortgages, plus they have recently launched into the Lifetime Mortgage market.
Using their experience from the mainstream mortgage market they have adopted a more flexible underwriting approach to effectively disrupt the equity release industry. Their recent launch with only selected partners – of which Equity Release Supermarket is one, is their new Property Plus plan. The LiveMore Property+ plan offers a more flexible underwriting approach than standard lifetime mortgages currently available.
What Is the LiveMore Property+ Plan?
The LiveMore Property+ is a new lifetime mortgage that aims to broaden the accessibility of equity release for those that may not have been eligible previously due to specific features about their property. The amount you can borrow is based on the age of the youngest applicant and the property value. The uniqueness of the Property+ mortgage is that it can accept spray foam insulation, however, the product also covers many other areas that, until now, had made it impossible to release equity.
This includes, but is not limited to:
- Proximity to commercial property
- Flood zones
- Service charge and ground rents
- Construction types
If you have been turned down for equity release previously due to features about your property it’s worth speaking to one of our independent equity release advisers who may be able to offer a new solution that was otherwise unavailable.
One of the most interesting changes to underwriting policy by LiveMore compared to the rest of the equity release lenders is their approach to homeowners with existing spray foam insulation in their roofs.
Now, you can access the equity tied up in your home, regardless of whether you have spray foam insulation. Equity Release Supermarket in association with LiveMore have a process where if spray foam insulation is present in the roof of your property a solution now exists. However, before delving into the details of how LiveMore’s process of dealing with spray foam insulation works, let's first explore more about what spray foam insulation is..
What Is Spray Foam Insulation?
Spray foam insulation (SFI) is an insulation material applied using a spray gun to the roof of a property. The foam is made from a combination of chemicals that react and expand, creating a layer of insulation that fills gaps and seals off areas to prevent air and moisture infiltration. With current household energy prices, many homeowners have opted to have spray foam in their property to help with insulation and ultimately their fuel bills.
It’s estimated that over 250,000 homes in the UK have spray foam insulation according to the Royal Institution of Chartered Surveyors (RICS). Because of the risks, it can pose to the structural integrity of the property, it can often be viewed as a risk for lenders who look to secure loans on a property such as a mortgage. Follow this link to our previous spray foam insulation article.
How Do I Check If I Have Spray Foam Insulation?
RICS has published guidance for homeowners who are considering installing spray foam insulation in March 2023 and this RICS guide highlights the importance of keeping any paperwork from any installations. The type of insulation should also be noted on any invoices or receipts. If in doubt you should be able to call the original installer to confirm.
Why Do Lenders Have Issues with Spray Foam Insulation?
Lenders face the challenge of mitigating risks when granting loans against properties. Some lenders have chosen to avoid these risks altogether. While spray foam insulation effectively maintains warmth in homes, it may lead to reduced ventilation. You might be thinking, "Isn't that the intended purpose?" and you're correct. However, the issue arises when decreased ventilation leads to increased moisture levels over time. This moisture can gradually harm certain roof structures, particularly wood, posing a higher risk for lenders, especially considering the prevalence of timber in roofs across many homes.
How does LiveMore Property+ accept Spray Foam Contrary to Other Lenders?
LiveMore will accept applications for properties with spray foam insulation. However, this is conditional upon the homeowner removing the foam within 90 days of the funds being released.
The good news with LiveMore’s approach is that you do not need to remove the spray foam before the money is released, which is the case with any existing lender. This is a significant advantage for people with limited savings to carry out such work as you can have the funds in your bank account before you have the spray foam removed – therefore you pay for the work completed AFTER the money has been released by LiveMore.
What is the process for applying for LiveMore Property+ with Spray Foam Insulation
First of all you will need to obtain a quotation from a reputable spray foam removal company that is reasonable and acceptable to you.
According to the RICS a 3-bedroom property costs on average around £40 per square foot to remove the existing spray foam insulation. So for a property around that size, the typical cost would be between £3,200-£4,000, however, this is just an estimate, and each property is obviously different in size, structure, and age.
This quote will then need to be submitted along with your LiveMore Property+ application which your Equity Release Supermarket adviser can assist you with following advice and an acceptable recommendation from them.
The property will be valued, and the surveyor will submit their report to Livemore, upon which if everything is acceptable, they will issue you with a mortgage offer. At that point, a date needs to be confirmed with the company that is conducting the removal of the spray foam and LiveMore needs to be advised, as they won’t complete until this date is booked.
The legal process can then be completed, and the money released for the works to be then carried out on the pre-arranged date. The spray foam needs to be completed within the agreed 90 days. The spray foam removal company will then need to issue a Certificate of Guarantee which should ideally be for a period of 10 years.
Note: Once the spray foam is removed it will also be the duty of your contractor to point out any further defects that may need attention and remedied.
Disclosing Information During the Equity Release Application Process
Homeowners must provide all relevant property details when applying for equity release. Failure to disclose such information can cause complications down the line. Non-disclosure may lead to delays or even rejection of the equity release application, leaving homeowners in a challenging financial position, particularly if they were depending on the release to support their retirement.
If you are considering equity release and have had spray foam insulation installed in your home, or you have been rejected previously due to other property features, it may be worth checking with your equity release adviser. Equity Release Supermarket has a team of independent equity release advisers who can help guide you through the process and find the best solution for your needs.
Please Contact us on freephone 0800 802 1051 where one of our qualified advisers will answer your call and be on hand to help with any questions you may have.
