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.
Total debt (years)
Legal & General product
Start of plan
Flexible @5.19% AER *
Premier Flexible @4.99% AER **
Debt saving for
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.”
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.”