Mortgages  

L&G offers 4.99% deal

L&G offers 4.99% deal

Legal & General has launched a lifetime mortgage with a 4.99 per cent annual rate.

The Premier Flexible drawdown product enables borrowers whose homes are worth more than £533,000 to release a portion of the wealth stored in their property, subject to a minimum loan amount of £200,000.

L&G gave – as an example of borrowers – a couple who are both aged 77 with a property worth £5m who release a lifetime mortgage of £1m from their home.

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 Total debt (years)

Legal & General product

Start of plan

1

5

10

15

Flexible @5.19% AER *

£1,000,599

£1,052,525

£1,288,611

£1,659,524

£2,137,200

Premier Flexible @4.99% AER **

   £994,949

£1,044,597

£1,269,231

£1,619.124

£2,065,475

Debt saving for

Premier

    £5,650

  £7,928

£19,380

   £40,400

    £71,725

In terms of rolled-up interest, the provider stated that these borrowers will be better off (when compared with L&G’s Flexible Lifetime Mortgage) immediately when the loan completes.

After 15 years, Legal & General stated that this would amount to a substantial saving of more than £70,000 in interest owed.

Nigel Waterson, chairman of the Equity Release Council, called this type of development “a genuine game-changer” for the sector.

He said: “Product innovation of this sort – together with the industry standards – will further mainstream equity release in 55 plus financial planning.”

Adviser view

Dean Mirfin, director at Key Retirement, said: “The introduction of a rate of 4.99 per cent, for those looking to release more significant levels of equity from their homes, is great news for advisers and their clients.”

peter.walker@ft.com