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SHIP welcomes addition of Northern Rock to panel

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  • 01/08/2000
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Northern Rock has become the first mortgage lender to join Safe Home Income Plans (SHIP), the self-r...

Northern Rock has become the first mortgage lender to join Safe Home Income Plans (SHIP), the self-regulatory organisation set up to promote safe equity release schemes and protect policyholders.

Its addition brings the number of affiliated members to eight. The other members are Allchurches Life, BPT Bridgewater, Carlyle Life, GE Life, Home & Capital Trust, NPI In-Retirement Services and Norwich Union.

Northern Rock launched its equity release scheme last spring. The Home Equity Release mortgage is an interest-only mortgage allowing over-60s to access the capital tied up in their property without having to move. Clients have the choice of the standard plan, which provides a cash lump sum, or the Cash Plus plan, which in addition to a lump sum provides a guaranteed monthly cash release.

The former has a rate of interest of 8.2% fixed for the loan’s duration and the latter has a rate of 7.99%. The rate will track the Bank of England base rate +1.99%, guaranteed not to exceed 8.99% for the life of the loan.

The loan is repaid when the policyholder dies or moves into residential care, and if there is insufficient equity in the property at this time the lender guarantees to meet the shortfall. If there is value in excess of the sum to be repaid, this will be passed on to the client’s estate.

Other safeguards include a pledge from Northern Rock that the client can continue to live in the property, they never have to pay back more than the sale proceeds of the property and that the property will not be repossessed, even if the accumulated debt exceeds the property value.

Rachel Ramsden, senior product manager, mortgages, at Northern Rock, said: “The safeguards show from the outset our determination to address any concerns the elderly might have about unlocking their home’s capital. Membership of SHIP reinforces our commitment to deliver a lifestyle product of the highest integrity.”

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