Legal & General (L&G) has launched an equity release mortgage with borrower guarantees and no monthly payments. Specialist IFA Key Retirement Solutions has tipped the product to lead the way in the market.
Dean Mirfin, regional sales manager for the company, said: ‘Legal & General has priced the product at a competitive rate ‘ the lowest fixed rate on the market ‘ which means lots of business. I hope to see more products available as there is currently little competition in the market.’
Customers have a guaranteed safeguard against negative equity, eviction and repossession provided their property is ‘adequately insured and kept in good repair’ ‘ ensuring they can live in it for their lifetime, or until they leave their homes.
No monthly payments are made, instead, interest is compounded monthly and added to the outstanding loan to be repaid when the mortgage itself is repaid. Interest is fixed at 7.3% for the life of the mortgage. Customers must be 60 years or older and have a home worth at least £40,000 to qualify.
Mike Bury, managing director of Legal & General Bank, said, ‘Older homeowners are looking for alternative ways to support their lifestyles. Using equity locked up in their homes may be a suitable way to do this.’
Some IFAs have been told this product is only available to clients through direct sales, however, L&G officials say IFAs are offered access through a ‘managed roll-out.’
Andy Wild is a reporter for IFA online. Additional reporting by Adele Burton
