You are here: Home - Better Business - Business Skills -

Product flexibility in later-life lending helping head in sand homeowners – Miller

by: Dave Miller, client account manager at Spicerhaart Corporate Sales
  • 11/06/2018
  • 0
Product flexibility in later-life lending helping head in sand homeowners – Miller
There are an estimated 1.6 million people approaching retirement who have interest-only mortgages, and many of those will not have the ability to repay the capital they owe.


Lenders have contacted all interest-only borrowers over the past few years, but many are burying their heads in the sand, as they don’t like the main three options being presented to them – remortgage, repossession or an assisted voluntary sale.

However, there is another option that is becoming more popular – equity release, with older home owners looking to it for many reasons, including as a solution to the interest-only issue.

As a result, equity release is attracting twice as many new customers as five years ago, with a 90% increase in just the past two years alone.

The range of equity release products on offer is growing by 25% year-on-year with many lenders now starting to offer products specifically designed to help pensioners struggling to pay the capital on their interest-only loan.


Control their retirement

One such product is Legal & General’s optional payment lifetime mortgage which allows borrowers over 55 to take out a mortgage with the interest fixed for life and the capital not due for repayment until they either move into long-term care or the property is sold after death.

This follows on from the success of lenders such as Hodge Lifetime who have successfully developed mainstream interest-only products specifically aimed at those older customers who can still meet affordability in later life rather than move directly into equity release products.

Here the borrower has an option on how to pay the interest – roll it up on top of the capital advanced to be repaid at completion, or make payments of any amount each month from £25 up to the full monthly interest.

This allows borrowers the freedom to choose and control their retirement as circumstances change.

I think we will see more lenders start to offer similar products as the demand for more flexibility in the market increases.

The more lenders there are, the more competitive the market becomes which means rates will fall, and that is great news for borrowers.


There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
Ying Tan
Buy-to-let top-slicing changes make interesting reading – Ying Tan

One issue has dominated the industry – and, indeed, our email inboxes – over the last month above all others....