Revealed - top reasons why equity release cases are declined

Despite only 8% of equity release cases being rejected, lender more2life has tracked the reasons that cases are declined to help advisers better manage clients’ expectations.  

While criteria typically vary from funder to funder, homes with flat roofs that take up more than 25% of the property, those close to commercial property or filled with clutter that makes a valuation difficult are less likely to be accepted.

Interestingly, while flat roofs, proximity to commercial property and flood risk have been consistent barriers over the last two years, single skim (i.e. no cavity wall) has fallen out of the top four to be replaced by clutter. 

Excessive clutter can make it extremely difficult for a surveyor to ascertain the integrity of the structure so may impact the resale value. more2life says prior to the pandemic, this may have been less prevalent as it will have been noticed during the face-to-face advice process and explained to the customers. 

Asbestos has also fallen out of the top ten as historic issues around this material become less common as they are rectified by homeowners, but the use of foam remains an ongoing issue.

Dave Harris, chief executive officer at more2life, comments: “While the vast majority of cases move from offer to completion smoothly, some issues with properties that will impact the final resale value mean that they are more likely to be declined.”

“It is vital that advisers know that properties with large flat roofs near commercial premises with foam insulation may struggle to be accepted so they can manage their clients’ expectations.”

He continues: “That said, with the pandemic restrictions and more advice than ever before being provided remotely, it has become far harder for advisers to pick up on details such as clutter or notice that something is not quite right with a structure.”

Harris believes an in-depth and wide-ranging discussion as part of the advice process can help – especially if any concerns are shared with the client and the lender.

“Every funder has slightly different criteria, but we believe it is important to educate advisers on these common reasons for decline so that clients are not disappointed,” he concludes. 

The table below highlights the most common reasons equity release applications were declined in 2020 versus 2019: