Megan Williams

Marketing Consultant

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Understanding the decisions behind equity release funding

2026-08-14 09:00:00

2024-11-01 00:05:00

Megan Williams

Marketing Consultant

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Good morning, Jennifer. Please can you tell us a bit about yourself, your history, and what you do at Royal London?

I’m an actuary by background and I have been working in the Financial Services industry for around 20 years. I’ve been at Royal London for two years, leading the Equity Release Funding team.

I actually came into equity release funding quite unexpectedly around five years ago. I didn’t know much about the product before I started but I found it incredibly interesting, especially when I learnt that a lot of the myths about equity release weren’t accurate. I could see the real value the product can bring when it’s the right solution for a customer.

At Royal London, I lead the team responsible for funding our equity release product. That means thinking about how we deploy Royal London’s funds, managing risk, and ensuring that we can support both our lending ambitions and the wider business needs for years to come.

What does it actually mean to “fund” an equity release mortgage?

At a top level, it means providing the capital for an equity release mortgage and then holding that loan as a long term investment. Equity release mortgages are usually long term investments, which complement the short term investments that we make so we can meet our business commitments, particularly in the annuities space.

As a mutual, we’re effectively investing funds that belong to our members to support new lending. This is quite an important distinction from our peers, as we have a responsibility to our members to make sure that those assets generate appropriate returns.

Talk us through a day in your job as Head of Equity Release Funding.

No two days are ever quite the same, but there are a few core elements to my day. A big part of my team’s role is to set our funding rates. These rates ultimately influence customer pricing and so we usually start the day with a team check in to consider the factors which impact our rates, such as market interest rates, inflation and broader economic developments. We will then make changes where it’s appropriate to do so.

We are also responsible for the overarching underwriting rules, which make sure that the risks we are taking on are manageable for Royal London. So, while the Operations Team handles day to day underwriting based on the underwriting rules, we might work with them to review more complex or borderline cases. Alongside that, we work with the Proposition and Distribution Teams to assess new product ideas or to review how we’re tracking against the business plan. It’s a really interesting and varied role.

When you’re funding an equity release mortgage, you’re balancing long term uncertainty. How do those factors shape the pricing that advisers see?

As funders, we’re dealing with a number of uncertainties. We don’t know exactly how property values might change, or when the loan will ultimately be repaid. One of the biggest factors that we consider is the no negative equity guarantee. This is a really important feature for customers, but it does add in some additional considerations for the funder. We need to manage the risk that the eventual value of the property could be lower than the value of the loan. We carefully consider those factors alongside market changes and conditions, and that ultimately influences the rates that advisers see.

How does being part of a mutual influence the way Royal London thinks about those long term decisions?

Being a mutual has a big influence on every decision that we make. We’re effectively investing members’ funds, so we have a responsibility to act as careful custodians of those funds. That means taking a long term view and being thoughtful about how we manage risk and return.

It also creates a different kind of perspective. In a way, customers are helping customers, with members’ funds supporting new borrowers. We need to make sure that what we’re doing works for both sides of that equation. We want to support as many customers as possible, but we also have to be disciplined. We can’t take risks that would undermine the outcomes for the members whose funds we’re investing.

Advisers sometimes come up against cases they can’t place or criteria that feels restrictive. Can you explain some of the risk considerations behind that?

A lot of it comes down to the property and how confident we are in its value over time, as we need to be comfortable that it will broadly track with the wider market. If there are characteristics that suggest it might not, for example location specific risks or features that limit its appeal, that can affect whether we’re able to lend.

Property marketability is another key factor. When the loan comes to an end, it benefits everyone if the property can be sold in a reasonable timeframe. If a property has a feature which suggests it is more likely to take a long time to sell, that increases the risk involved and we need to carefully consider the circumstances before we can agree to lend. Adviser engagement is key at this stage to ensure that everyone understands the potential outcomes.

Ultimately, we’re trying to ensure that the risk of complications down the line remains low. That’s what sits behind a lot of the criteria that advisers see.

What would you want advisers to better understand after reading about the funding process?

One of the key things I’d like advisers to know is that at Royal London, we put customers at the heart of funding decisions. Funding rates are carefully considered to balance a combination of funding costs, market conditions and inherent risks, all while making sure we can maximise outcomes for our customers and our new borrowers.

Similarly, we put criteria in place to help us manage the long term risks and to ensure that outcomes are positive for both our members and borrowers. As a Funding Team, we want to make sure that we can support customers and the market in a way that remains fair and sustainable for the future.

Ultimately, our main aim is to ensure that we get the best outcome for all our customers.

Thank you for lifting the curtain on the funding process Jennifer!

If you’d like to understand more about our products, or about how we’re ensuring good outcomes for our customers, you can reach out to our equity release specialists.