Authorized and Common Dwelling Finance has launched a brand new lifetime mortgage for over-50s whose interest-only offers are on account of expire.
The Fee Time period Lifetime Mortgage (PTLM) is being hailed by the lender as the primary of its form – not least as a result of lifetime mortgage merchandise have all the time required debtors to be 55 or over.
It gives a tax-free money lump sum in return for fastened month-to-month curiosity repayments up till retirement or age 75, whichever comes first.
Debtors can then select to make voluntary repayments in retirement if they want, however in contrast to a Retirement Curiosity Solely (RIO) mortgage, they’re not required to make funds for all times.
Any unpaid curiosity is added to the entire quantity owed and is usually repaid from the sale of the house when the shopper passes away, or strikes into long run care.
Debtors might want to go affordability checks, however Authorized & Common mentioned the product will supply extra flexibility by assessing pre-retirement earnings subsequently serving to these with steady earnings to qualify, even when they anticipate earnings to cut back of their retirement.
Who can profit from the brand new mortgage?
Householders can use the PTLM to exchange an current mortgage, similar to an ordinary interest-only mortgage.
In accordance with the FCA there are round a million excellent interest-only mortgages. Debtors are sometimes aged 56 with £140,000 left to pay.
One in 5 debtors on this scenario intend to promote their property, mentioned Authorized & Common however many would favor to hunt another answer.
Greater than half of excellent interest-only mortgages having 25% to 55% of the property worth to repay – and these are the very folks the PTLM is more than likely to help.
Certainly, householders will be capable to borrow as much as 55.3% LTV – considerably increased than LTVs in Authorized & Common’s current later life mortgage vary.
Craig Brown, CEO, Authorized & Common Dwelling Finance, mentioned it aimed to supply extra alternative for householders who have been sitting on fairness of their houses however couldn’t entry it due to their age.
“There’s a sizeable group of house owners who fall between conventional lifetime mortgages and Retirement Curiosity-Solely (RIO) options,” he mentioned.
“PTLM bridges this hole, providing an ideal answer to people over 50 with substantial residence fairness who need entry to this earlier by way of a mortgage that’s paid for from their present earnings.
“This not solely provides youthful debtors extra choices to stay the life they need, however it’s additionally a solution for interest-only mortgage holders looking for a reimbursement plan to remain of their houses.”
Prospects who want to benefit from this deal ought to converse to an fairness launch adviser.