How did it come about?
- The product is the result of focus groups which found that older borrowers considered mortgages to be something for younger people so had become disenfranchised from the market
- Many of those asked said they were still fit and able to live an active lifestyle but lacked the income to do it in the early years of retirement.
- The Retirement Lifestyle Booster is aimed at homeowners aged 60-79 who are intending to downsize, but aren’t ready to do it just yet. The Society found many older homeowners were emotionally attached to their homes, so this product is targeted to ease the transition.
- It comes with a product fee of £945 – paid on completion.
- There is a free valuation on applications up to £500,000- application fees up to this figure will be £175. Applications beyond this figure will carry a higher fee but benefit from a discount of £360.
- Borrowers will be paid a fixed sum on the 10th of every month, for up to 10 years. The only payment borrowers make to the lender will go towards covering the average interest due. This means the loan is designed so the outstanding balance can be repaid by downsizing their property.
- The minimum amount that can be borrowed is £45,000 with a maximum LTV of 25% to ensure the downsizing of the property is realistic at the end of the term.
- The product will include an affordability assessment as an interest only product. Borrowers’ retirement income will be assessed to ensure they can manage the monthly payments and if borrowers are still working, their payslips will be assessed as standard.
Important info for brokers
- Brokers will not be able to find this product on their sourcing systems due to the unique design of the loan. Those registered with Family BS will be made aware of the product through their membership and more information about the product will be released to the wider market in the coming weeks.
- Family BS has plans to list the product on its Answers in Retirement (AIR) Sourcing System, coming shortly.
- It is hoped the product can help add value to the relationship brokers have with their clients, both new and existing. Family BS wants this product to encourage brokers to reconsider what they offer their older clients, who may have found it difficult in the past due to the limited product options.