A "new kind of lifetime mortgage" which improves the options available for borrowers over 50 has been launched by Legal & General Home Finance.
The Payment Term Lifetime Mortgage helps borrowers access property wealth earlier, from 50 rather than 55, and offers tax-free cash lump sum in return for fixed monthly interest repayments up until retirement or age 75, whichever comes first.
Borrowers can then choose to make voluntary repayments in retirement if they wish but, unlike a retirement interest only mortgage, they are not required to make payments for life.
Any unpaid interest is added to the total amount owed and is typically repaid from the sale of the home when the customer passes away, or moves into long-term care.
Legal & General Home Finance CEO, Craig Brown, said: “This launch signals our commitment to lead the way and offer more choice for homeowners who are sitting on equity in their homes but can’t access this because of their age.
“There’s a sizeable group of homeowners who fall between traditional lifetime mortgages and retirement interest-only solutions.
“PTLM bridges this gap, offering a great solution to individuals over 50 with substantial home equity who want access to this earlier via a mortgage that is paid for from their current income.”
Brown added that this not only gives younger borrowers more options to live the life they want, but it’s also an answer for interest-only mortgage holders seeking a repayment plan to stay in their homes.
“Customer needs are evolving, which means the products available need to align to meet changing circumstances,” he continued.
“It’s our responsibility as a leader in the market to listen and respond to adviser feedback, and make sure that innovative, tailored products are on offer, and the market continues to flourish and adapt to a changing world.”
Flexibility
Legal & General Home Finance added that borrowers will need to pass affordability checks, but PTLM offers more flexibility by assessing pre-retirement income even if they expect income to reduce in retirement.
Homeowners can use PTLM to replace an existing mortgage, such as standard interest-only mortgage, helping people on expiring interest-only deals who may have a shortfall in their repayment plan.
Legal & General Home Finance also stated it has listened to adviser feedback to create the best possible solution to support their clients and, as a result, there will be a dedicated team set up under the ‘PTLM Concierge’.
This will help advisers use the product and underwrite cases.
tom.dunstan@ft.com
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