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Equity release lender scraps affordability checks on selected deals

  • 14/06/2016
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Equity release lender scraps affordability checks on selected deals
Equity release provider Retirement Advantage has scrapped affordability assessments on selected mortgage products while lowering its minimum age on application to 55.

The lender has made the changes to its Interest Select Options range after the Financial Conduct Authority (FCA) modified its rules around assessments for hybrid lifetime mortgages.

Under the Mortgage Market Review (MMR) rules, if an equity release borrower took out a hybrid mortgage giving them the option of making payments, affordability was required to be checked even though the applicant could elect not to make payments by rolling them into the capital.

Simon Chalk, technical manager, equity release, Age Partnership, said it was good news to have common sense back in the market, which was taken away by the MMR. He said the changes would once again allow him to have an adult-to-adult conversation about what the applicants felt was affordable.

No proof of income or expenditure needs to be supplied for the applicant and customers are no longer required to provide details of unsecured loans. The products retain the flexibility for customers to switch to an interest roll-up mortgage without facing repossession.

To accompany these changes, Retirement Advantage has lowered its minimum age to 55, raised its maximum loan size to £2m and reintroduced its Voluntary Select Plan.

“The Voluntary Select Plan was one of the most flexible on the market so it’s helpful to have this product back,” said Chalk. “It offers high loan-to-values up to 49% with the option to make up to 10% overpayments per annum, as frequently as every month as long as you remain within the limit. Most other providers restrict the frequency to around twice a year.”

Alice Watson (pictured), product and communications manager at Retirement Advantage Equity Release, said: “The FCA’s decision to change their stance on affordability assessments last month was a welcome commonsense move.

“The change will open the door for new products and we’re pleased to be the first to bring modified solutions to market. There’s no doubt that these changes to our flagship interest select products will smooth the application process and make lives easier for advisers and customers alike.”

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