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Vernon BS relaunches retirement mortgages

  • 27/09/2017
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Vernon BS relaunches retirement mortgages
Vernon BS has launched two multi-use retirement mortgages with no age restrictions or arrangement fees available on both repayment and interest-only terms.

The initial rates are 1.25% below its standard variable rate (SVR) of 4.7% with a Lasting Power of Attorney (LPA), (3.45% at present) or 0.50% below the SVR (4.2% at present) without an LPA for the first five years.

The Vernon first launched its retirement product in 2015, becoming the first and only lender to offer a discounted mortgage rate to older couples who register a Lasting Power of Attorney.

Vernon BS branch counter staff were obliged to pass the equity release qualification to advise on the product, launched last month and only independent qualified equity release advisers may advise on the range at this stage.


Regulator review

This week the regulator published its research into the later life lending market which highlighted prospects for growth but found a raft of problems including poor market visibility for borrowers turned down by lenders and opaque criteria.

As part of its investigation, the FCA spoke to firms which had trialled approaches designed to support consumers experiencing a life event during the product life cycle, which included a pilot scheme incentivising consumers to take out Powers of Attorney with discounted fees or product rates.

It also reduced a risk for the lender by ensuring that arrangements were in place for a named person to take over if, in the future, a borrower lost mental capacity and was unable to manage their finances.

Tom Gurrie, intermediary sales manager at the Vernon, said the product relaunched last month after a further risk analysis and the mutual hopes to extend the deal to the wider market when regulation allows.


Alternative product

The products can be repaid through property sale when the borrower dies or moves into alternative accommodation such as long-term care.

“These products provide an alternative to a more traditional equity-release mortgage, with no roll-up of interest and no increase in the mortgage debt. We are seeing more applicants coming to the end of an interest-only mortgage in their later years who have no means to repay the outstanding debt demanded by their lender and therefore need to re-schedule their loan”.

“At the moment, the products are only available to brokers with an equity-release qualification, so we welcome the recent announcement by the FCA to review the rules on advice when discussing retirement interest-only mortgages”.

Gurrie said when elderly borrowers are considering taking on a mortgage, it makes sense to involve the wider family in that discussion, particularly where the intention is to leave the mortgaged property to children or other family members.

“An LPA is becoming increasingly used to allow money issues, bank accounts etc to be easily dealt with by a trusted family member where a person becomes infirm or loses mental capacity.”

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