MortgagesOct 8 2015

More 2 life lowers lifetime mortgage rate to 6.35%

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Retirement mortgage lender more 2 life has reduced rates on its lifetime mortgage Tailored Choice Plan by 0.35 of a percentage point and made changes to the criteria for enhanced LTV.

The product has been discounted to 6.35 per cent and is now available at higher LTVs to a wider range of customers with medical conditions or lifestyle issues that affect their health.

Higher rates of up to 55.5 per cent are now available to those with a qualifying condition, including smokers and people with high blood pressure.

What is more, the minimum age for joint lives has been reduced to 65 from 70 and minimum property value is £60,000 with a maximum of £750,000.

The minimum loan and additional drawdown amounts are £15,000 and £5,000 respectively.

The provider has recently launched a campaign to urge financial advisers to ensure that their clients fully disclose details about their health and lifestyle before making a product recommendation.

Provider view

Stuart Wilson, marketing director at more 2 life, said: “The rate reduction and new LTV criteria underlines the competitiveness of enhanced products and will ensure more customers and their advisers can benefit.

“However medical underwriting should be a given in the equity release market just as it is for annuities. Underwriting customers gives us more confidence that we can provide the most appropriate loan advances, and all it takes is 13 simple health and lifestyle questions to see if a customer qualifies.

“Not only do we offer the highest LTVs in the market, we now offer even better LTVs to people who smoke, are overweight and have high blood pressure.”

Adviser view

Clive Balchin, managing director at Lancashire-based James Trickett & Sons, said: “The interest rate seems quite high. It seems like the ideal client for this product is someone who is 75 years old and has no children, because they would not be worried about the rate of interest eating away at the equity.

“People are becoming more and more aware of equity release. I have been advising on equity release for more than 15 years now, and for the right people it is the best thing since sliced bread. One of the difficulties is getting compliance to understand this.

“Compliance officers are very wary when it comes to equity release because there is an increased possibility of being sued. In my years in advising in the area, I have not been sued once. I am confident that every single application I do is watertight. We usually make sure that a family member or their solicitor sits in on the meetings.

Charges

No arrangement or valuation fees.

Verdict

Here, a 0.35 percentage point rate reduction and changes to the criteria for enhanced LTV are welcome – although the rate might still be a tad too high.

Equity release always provides a compliance headache for advisers because it typically involves vulnerable people. It is important for advisers to be on top form when it comes to the health and lifestyle underwriting process. Failure to ask the right questions could result in clients missing out on enhanced rates.

If British pensioners follow in the same vein as their Australian equivalents, following the implementation of pension freedoms, many will see their pension pots dry relativelyquickly. Equity release could become a godsend for people in this predicament.