Legal & General has launched a lifetime mortgage charging a market leading 4.99% APR on larger loans – and Bower are delighted to be able to offer it to our clients.
In the last few weeks the insurer has unveiled the details of the drawdown lifetime mortgage:
• Available to borrowers with homes worth more than £533,000
• Reliant upon a minimum loan amount of £200,000
• Accompanied by a 1% cashback deal
• Most suited to those looking for high value loans
L&G claims the Premier Flexible is the first equity release product offering an interest rate under 5%. It comes with an arrangement fee of £4,999 and offers a 1% cashback deal.
L&G has said that the low interest rate of the Premier Flexible Lifetime Mortgage will provide customers with substantial savings compared to their Flexible Lifetime Mortgage.
The table below (taken from the Mortgage Finance Gazette) demonstrates that a couple aged 77 releasing £1 million from a property worth £5million would save close to £8,000 in interest in the first year, and save £70,000 in interest over 15 years compared to many other products on the market. The 1% cashback deal included would be worth £10,050 to them*.
Total loan amount for the above example over 15 years:
The plan also features an inheritance protection option. At no extra cost, homeowners can select to leave an inheritance to their beneficiaries by protecting a percentage of the eventual net sale proceeds of their home.
It has been suggested that the product could have a place in the care market, as it will allow older borrowers to draw a tax-free lump sum which can be paid directly into the care home of their choice.
Nigel Waterson, chairman of the Equity Release Council, said the low rate could be ‘a genuine game-changer’.
“This type of development could be a genuine game-changer for our sector. Product innovation of this sort – together with the industry standards – will further mainstream equity release in 55+ financial planning.”
Geoff Charles, CEO of Bower said:
“Products coming to the market such as L&G’s Premier Flexible, the first 4.99% drawdown product available, represent a landmark moment for the equity release industry; one that will hopefully lead to further decreasing rates and therefore more affordable products for our clients.”
“Its wider impact on the market as a whole will depend on the amount of lending that the plan will attract, but it undoubtedly takes an historical step by offering a drawdown interest rate below 5 per cent.”
An equity release plan is not right for everybody, so Bower recommends homeowners aged 55+ in need of a financial boost to speak to an independent specialist in retirement lending before making a decision.
Your specialist will take the time to explain everything thoroughly, including how equity release will reduce the value of your estate and how it may affect your entitlement to some state benefits. If you decide to go ahead, then we can take care of everything for you.