ASEW · Assessment of Mortgage Advice Knowledge
Later-life cases test your judgement with older borrowers: what to do about an interest-only shortfall near term end, when a retirement interest-only mortgage fits, and how a roll-up lifetime mortgage grows. Protection cases test whether you can match cover to the need: decreasing term for a repayment mortgage, family income benefit for children, income protection deferred periods that start when sick pay stops, and the limits of state support. Watch for recent changes: Statutory Sick Pay has been payable from day one since 6 April 2026. Health, family pressure and vulnerability run through these cases, so expect Equality Act 2010, FG21/1 and Consumer Duty questions too.
8 min read6 sections
Checked against: Walbrook (formerly LIBF) CeMAP specification v14, ASEW LO1, LO3 (AC3.3, 3.5), LO4 (AC4.6-4.7) and LO5 (AC5.1-5.3); FCA Handbook MCOB 11.6, 8.5A, 13.3, ICOBS 5.2-5.3 and 7.1, PRIN 2A, FG21/1; Equity Release Council standards; gov.uk SSP and Support for Mortgage Interest; FSCS limits; Equality Act 2010; CIDRA 2012; checked 11 Oct 2026. Independent prep, not endorsed by Walbrook (formerly LIBF).
Start with the numbers: balance, minus every repayment vehicle and saving the customer is willing to use, equals the shortfall. Then work through the options. A term extension into retirement and a switch to a retirement interest-only (RIO) mortgage are both material to affordability, so the lender must run a full assessment (MCOB 11.6.3R and 11.6.4E). Close to retirement, it needs firm evidence of pension income, such as a pension statement (MCOB 11.6.15G(2)).
If the term ends unpaid, the customer has a payment shortfall. The lender must treat them fairly, consider forbearance such as a term extension, and repossess only as a last resort (MCOB 13.3.1R, 13.3.2AR and 13.3.4AR). A variation made solely for forbearance does not need a full affordability assessment (MCOB 11.6.3R(3)(c)).
Trap: Assuming a same-lender switch with no extra borrowing always escapes the affordability check. A RIO switch does not.
Takeaway: Size the shortfall, then test each option. RIO and extensions into retirement need full affordability; term-end shortfalls need forbearance.
A roll-up lifetime mortgage charges compound interest, so the debt grows fast: £55,000 at 6.2% a year becomes £55,000 × 1.062^12 = £113,203 after 12 years. The Equity Release Council’s no-negative-equity guarantee caps the amount repaid at the sale price less reasonable costs, so the family never pays a shortfall; it does not protect an inheritance. Inheritance protection does, by ring-fencing a percentage of the value in return for a lower maximum loan. A drawdown facility charges interest only on money actually drawn.
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MCOB 8.5A.6R requires the adviser to consider whether the benefits outweigh any loss of means-tested benefits (such as Pension Credit and Council Tax Reduction) and any tax effect; alternatives such as a local authority grant or a further advance; the customer’s wishes for their estate; their health and life expectancy; and future needs. The adviser must hold an appropriate equity release qualification under the FCA’s Training and Competence rules, and every customer must receive independent legal advice (Equity Release Council).
Family members often attend. Speak to the customers without them for part of the process, check the decision is theirs, and adapt for health needs. The Mental Capacity Act 2005 s1 presumes capacity unless it is shown otherwise, so a diagnosis alone is not a reason to stop.
Trap: Thinking the no-negative-equity guarantee leaves something for the heirs, or skipping the benefits check.
Takeaway: Roll-up compounds. The guarantee caps the debt; inheritance protection keeps value. Check benefits, grants and who is really deciding.
