Mortgages  

More2life raises LTV rates on Tailored Choice Plan

More2life has increased the loan-to-value rates by up to 5.5 percentage points on its specialist plan for customers with medical conditions or lifestyle issues affecting their health.

The lender’s Tailored Choice Plan, which was launched last month, now offers LTVs of 55.5 per cent.

The plan aims to bolster choice and flexibility for equity release customers and advisers by providing personalised plans and rates.

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It also offers a guaranteed inheritance feature as standard for all drawdown customers, which ensures that a share of the property value can be passed on to beneficiaries when clients die or go into long-term care.

A minimum age of 55 and a minimum property value of £60,000 with a maximum of £750,000 are applicable.

The minimum loan is £15,000 and minimum additional drawdown amounts are £5,000. More2life said it will consider loans against a wider range of properties than considered by some other lenders.

In April, the provider unveiled research which found that more than half of specialist retirement advisers believed property equity would become more important in retirement planning as a result of the pension reforms.

The study conducted from a sample of 100 retirement specialist advisers, found that two fifths (42 per cent) expected demand for equity release to increase over the next three years as the changes to the retirement income market allowed people to better assess their overall wealth when planning for retirement.

Reactions

Provider view

More2life marketing director Stuart Wilson said: “Medical underwriting should be a common feature of the equity release mortgage market, just as it is for lifetime annuities. However, it’s frustrating to see there are still many customers missing out on higher LTVs as their lifestyles are not being taken into consideration when applying for equity release.

“Underwriting customers gives us more confidence that we can provide the most appropriate loan advances. All it takes is 13 simple health and lifestyle questions to see if a customer qualifies.”

Adviser view

Lorreine Kennedy, IFA and head of care fee advice at London-based Carematters, said: “The sensible use of equity release can enhance a person’s life considerably. Not a huge number of providers offer this sort of product. We do need more flexible products targeted at those at retirement age.

“What many people do not know is that conditions such as diabetes and high blood pressure actually qualify for enhanced lifetime mortgages.

“The interest rates offered by equity release firms at the moment are fair when you consider the length of the arrangement, which tends to be quite long-term. The rate of interest averages around the 5 per cent mark.”

Charges

£695 arrangement fee.

Verdict

The pension reforms have had a ripple effect on the equity release market. For many pensioners the income produced by an annuity was insufficient, and many turned to equity release to top up their income. Gone is the requirement for pensioners to convert their pension pots into an annuity thanks to the new freedoms – leaving the future of the equity release market a hot topic for debate.