Pensions  

L&G cuts lifetime mortgage rates

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.

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This week Legal & General also increased loan-to-value (LTV) 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 added: “To think that a young 60-year-old homeowner can now borrow 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