Legal & General has cut interest rates on its lifetime mortgage products.
The move also brings its Flexible Lifetime product below 5 per cent annual equivalent rate (AER) for the first time, with a new rate of 4.99 per cent for customers who are interested in a drawdown product to help fund retirement.
In mid-February, Legal & General launched the Premier Flexible product with a 4.99 per cent annual rate, targeting equity release borrowers whose homes are worth more than £533,000 - subject to a minimum loan amount of £200,000.
This week Legal & General also increased loan-to-value ratios for its Premier Flexible product by 2 per cent at all ages, for qualifying lifetime mortgage customers.
Flexible lifetime mortgage rate reductions | |
Legal & General Product | Previous AER | Reduced AER |
Premier Flexible | 4.89% | 4.80% |
Flexible | 5.08% | 4.99% |
Flexible with 2% Cashback | 5.28% | 5.19% |
| | | |
All the provider’s lifetime mortgages offer optional partial repayment, allowing customers to repay up to 10 per cent of the amount borrowed each year without any early repayment charges.
Legal & General’s products are also not subject to affordability assessments.
Adviser View
Simon Chalk, technical manager for equity release at Age Partnership, said Legal & General set a new record low for a genuine rolled-up interest lifetime mortgage with these reduced rates.
He said: “To think that a young 60-year-old homeowner can now borrow a modest £10,000 upwards, for what might be 25 to 30 years or more, fixed at a sub 5 per cent rate is staggering.
“The value inherent in the market today serves to answer the critics when they claim that equity release is expensive.”
peter.walker@ft.com