The changes are part of the firm’s plan of “delivering long-term value, reliability, and increased flexibility for advisers and their clients”.
The drawdown facility means clients will have the option to access their property wealth more flexibly and can tailor the withdrawals to suit their needs.
The minimum release is £2,000 and the maximum facility is the lower of the initial loan multiplied by three or the maximum loan to value (LTV) available at point of sale less the initial loan.
The ERC period has been shortened from 10 years to seven years, which will give more flexibility for clients who choose to service the interest on their loan or make larger repayments.
The Principal product is available to homeowners aged 55-89 years and 364 days. It comes with no fee and loan sizes range from £10,000 to £1m in England and £10,000 to £50,000 in Wales and Scotland.
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The minimum property value is £125,000 – £150,000 for ex-council properties – with the maximum property value standing at £2m in England and £1m in Wales and Scotland.
Any pipeline cases progressing through application will continue under the previous 10-year ERCs. Upon completion, the cases will be moved to the new seven-year ERCs and communications will be sent to inform all parties.
Alan Ritchie, customer life stage and solutions director at Royal London Equity Release, said: “The evolution of our Principal product reflects Royal London’s commitment to equity release as a core solution to meet customer needs. We know that the market must expand significantly to meet the growing customer demand for robust retirement planning and repayment of traditional mortgages.
“The new capabilities – a drawdown option and a reduced early repayment charge period – provide advisers and their clients with more choice and meaningful flexibility. We will continue to listen to advisers and also use insight from customers to innovate in the market and to stand out for customer outcomes.”
