Making Equity Release deals attractive for Investors

Equity Release deals are a GOOD investment

Equity release mortgages are increasingly popular in the UK and up to FOUR billion per year is changing hands. Investors are now starting to look at the much more profitable Spanish market as the margins tighten in Britain.

Like any deal, an equity release investment in Spain needs two sides, both happy to proceed.

Sometimes it is the case that deals can´t be done because sellers often overvalue their property and underestimate the risk taken by the investor.

Investors in Equity Release in the UK are not getting the sort of value that they can get in Spain.  Consider the following for example:

The BBC says that in the UK, pension companies may be harbouring billions of pounds of losses from home equity release loans.

Simply put, they paid too much for deals and did not do their due diligence. It is our job to make sure that this does not happen to our clients in Spain.

We guarantee to negotiate deals where everyone is content.

JJC Capital Partners is the only English-speaking operator covering the whole of Spain plus the islands

Our clients know the basics; under Spanish equity release, homeowners borrow money against their house’s value and, the best part, don’t repay anything until it’s sold.

Due to the increased competition in the UK, it appears that lenders have underestimated how much these loans could cost them.

Investors in Equity Release deals in Britain are not getting a good deal. John Mann, MP for Bassetlaw said:

“I think many financial institutions (in the UK) have pushed the boat out too far with this creating a potential systemic risk.“

The recent parliamentary report was seen as broadly supportive of the industry and reiterated that the borrowers are safe.

The reason is that loans now come with a guarantee that the property owner’s family won’t have to pay more than the value of the house.

Any potential difference is absorbed by the lender. It is different in Spain, meaning both investors and borrowers are protected and potentially even better off.

One particular lender is owed more than £6bn. Just Group, an equity release company, obviously paid too much for their portfolio.

They said last month that a PRA draft does contain proposals, which if implemented would result in a reduction in Just’s regulatory capital position. This effectively signals a smaller financial cushion to absorb losses.

Despite the negativity, they would need the value of the real estate to fall by around one quarter for them to start losing money. There is no immediate danger for these British investors, but surely Spain is a more attractive bet for them?

How can homeowners in Spain take advantage of the increased interest from investors in Equity Release investing?

Homeowners need to remember that we are structuring deals to ensure both sides are happy. We are not dealing with funds with very deep pockets but individual investors with less than 1,000,000 euros to invest in many cases.

If homeowners overvalue their property, ignoring the professional valuation they have received from us, the property will stay on the market for too long and it becomes difficult to find an investor.

We’ve visited houses to do our photography and the dishes are literally still in the sink, the beds unmade and the washing on the line. It is in the interest of the seller to make the property look as good as possible to attract buyers.

It is also helpful when sellers help with the property description. They lived there for years; they are the best people to talk about the amazing views, the amenities within walking distance and the history of the area.

What attracted them to the property is what will attract the investor too.

You can trust JJC Capital Partners

With the paperwork/legalities attached to the biggest asset you own in Spain, your home. We also offer a keyholding service for clients who are out of the country to enable us to do viewings in their absence.

A great opportunity for both Investors and clients wishing to take advantage of the benefits equity release options we have to choose from.

Now is the time to take advantage of the interest that there is in Spanish equity release, and we can help both parties you to get the deals over the line.

Please let us know your needs and if you work with us, we’ll continue to deliver more than we promise.

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