Legal & General has launched the first sub-4.5 per cent fixed rate roll-up lifetime mortgage product in the market.
The Premier Flexible Lifetime Mortgage comes in at 4.44 per cent AER, with a product arrangement fee also lowered, from £4,999 to £1,999.
Citing average SVR rates for the top 10 UK lenders in June - which averaged 4.51 per cent - L&G argued the new deal represents a substantial saving.
For a customer with a loan of £1m, over a 15-year period the new Premier rates would represent a saving to the borrower of £87,594 in rolled-up interest, when compared to the product’s former costings, it added.
The lender has also made reductions on its Flexible and Flexible Plus lifetime mortgage rates, with Flexible falling from 4.99 to 4.59 per cent AER and Flexible Plus going from 5.35 to 4.99 per cent AER.
| Total debt outstanding on £1m loan | ||
Legal & General Product | 5 years | 10 years | 15 years |
Premier Flexible @ 4.80% AER* | £1,257,787 | £1,590,059 | £2,010,110 |
Premier Flexible @ 4.44% AER ** | £1,245,092 | £1,547,161 | £1,922,516 |
Debt Saving with new rates | £12,695 | £42,898 | £87,59 |
Bernie Hickman, chief executive at Legal & General Home Finance, said these reductions are blurring the lines with the residential mortgage market, making lifetime a mainstream solution for 55+ financial planning.
“An estimated £1.4trn of housing equity rests in the hands of the over-55s, but for the market to reach its full potential we must continue to improve consumer value for money and encourage more customers to talk positively about the real benefits of releasing equity for retirement.”
The firm’s chief operating officer Steve Ellis added that even with an expected lifetime mortgage market size of circa £2bn this year, releasing equity still only makes up a small part of the wider mortgage market.
“There is so much potential for our market to grow, and it’s therefore clear that more needs to be done to improve consumer confidence,” he stated.
“With our first sub-4.5 per cent roll-up lifetime mortgage, we believe we are now offering a product that compares favourably with mainstream SVR mortgages, which will allow customers to make more transparent choices.”
Dean Mirfin, technical director at Key Retirement, confirmed this is the best fixed rate on the market and the first to go below 4.5 per cent.
“This is a significant move especially on this product, which is aimed at higher loans, where by their very nature, even a small change in rate has a very considerable impact on the cost of borrowing.”
peter.walker@ft.com
