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Retirement interest-only a ‘big opportunity but products so far are income based’ – Star Letter 28/09/2018

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  • 28/09/2018
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Mortgage Solutions and its sister title Specialist Lending Solutions select the most thoughtful or thought-provoking comment for Star Letter.

 

This week’s letter comes from Peter Yates, managing director at Premiership Mortgage Team, in response to the article: Exclusive – Legal and General to launch RIO and encourage mainstream broker interest.

Yates said the expansion of retirement interest-only is “a big market opportunity” but suggested the deals on offer could be improved.

He said: “The new products appearing so far are income based with monthly payments. Most people interested in this [product] will be property rich and income poor which is why they wish to release equity and won’t fit this criteria.

“What about a product which advances up to 40% of the value, interest roll up and the flexibility of capital draw-down?

“This would enable the benefit of lower rates than the current equity release average of 5.5% and be a far more attractive product to those with small incomes not wishing to pay three times the rate of the average re-mortgage.

“Come on lenders.”

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