Standard Life Bank (SLB) has become the latest lender to move into the equity release market.
SLB will offer its Freestyle Home Cash Plan to those aged over 60 and will release rate details in the coming weeks. The product will be a rolled up interest loan, payable on the death – or move into long term care – of the borrower.
Anne Gunther, chief executive of SLB, said: “Standard Life Bank has paid careful attention to how its equity product is sold – the Freestyle Home Cash Plan will only be available through an independent financial adviser.”
Gunther said borrowers would be asked to explore other alternatives before looking at the equity release product, although where appropriate she said a home should be used as a financial asset to safeguard borrowers’ futures. Gunther added: “We will limit the proportion of equity drawn down at the age of 60, but lend a larger proportion of the value of the home to an 80-year-old. By being prudent at the beginning of retirement we are building-in further flexibility for whatever the future brings.” SLB has become a member of Safe Home Income Plans.
The announcement comes as the Mortgage Code Compliance Board has highlighted the gap in current regulatory proposals which sees home reversion schemes remain outside the scope of Financial Services Authority (FSA) regulation.
The FSA is due to consult the industry in November on bringing reversion schemes within its scope and is expected to receive widespread support for such a move.
Brad Baker, communications manger at the MCCB, said any new rules about reversion schemes could not now come into effect with the rest of the FSA’s mortgage regime, but he hoped something could be drawn up sooner rather than later to have them covered.