The launch is one of a number of developments the firm plans to implement this year following the acquisition of equity release provider Newlife, including the introduction of a hybrid lifetime mortgage and a digital proposition for both direct and intermediated business.
Steve Ellis, chief operating officer, said Legal and General Home Finance planned to write £500m worth of business this year, more than double last year’s target of £200m which was successfully exceeded.
The product will cater for older landlords who will be able to raise a loan against any of their portfolio, whereby the loan will be secured on individual properties. Borrowers will be able to withdraw capital from their buy-to-let portfolio and either reinvest that money in further properties, retain the income from their portfolio or use the money for their own personal use. They will also be able to leverage capital out of the property without paying a capital gains tax bill.
An additional feature will enable customers to maintain the income derived from their portfolio should they move into long-term care. Legal and General will waive the requirement that a loan is repaid should a customer move into long-term care, which is a feature of most traditional lifetime mortgages.
Before it was acquired by Legal and General last year, Newlife offered a landlord equity release scheme which was designed for borrowers aged 55 and over who used rental property for investment purposes in order to help boost their retirement income.
Legal and General is also readying a hybrid mortgage product this year but could not offer specific product details or a timescale for its launch. The firm told Mortgage Solutions last year that it was looking to develop a product that combines the features of a standard residential mortgage with elements of a lifetime mortgage.
Ellis added that the firm would like to see a change in regulation that allowed customers to make regular repayments on lifetime mortgages. Earlier this month the Equity Release Council published its response to the Financial Conduct Authority’s (FCA) call for input on competition in the mortgage sector, calling for greater flexibility in how affordability is assessed to encourage innovation in the lifetime mortgage space.
“Currently we offer the option to make four partial repayments a year, but we’d like to see that extended to 10 which would go some way in helping to solve the interest-only issue many borrowers face,” Ellis said.
Ellis said the firm had plans to ‘do digital really strongly this year’ which would involve a new proposition to attract more direct business.
“Consumers and advisers have an expectation of how technology supports them but that doesn’t really exist in the lifetime mortgage market at the moment. We want to make it possible that an adviser can turn up to a customer with a tablet in hand and process the case then and there.”
Ellis added that he expected its digital proposition to be ready by the end of March, which it plans to keep improving over the course of the year.