Retirement Advantage has launched an equity release product that it claims has the lowest interest rate ever they have offered.
The Lifestyle Lite product has a monthly interest rate of 3.92 per cent, and comes with an optional cash reserve facility for an extra cost.
It is part of the Lifestyle Options range, which also includes Gold and Platinum plans, and is a traditional-style equity release product, where the customer receives a one-off cash lump sum and the interest on it rolls up and is added to a lifetime mortgage secured against the customer’s home.
The early repayment charge on this product is fixed for the first eight years, and is 5 per cent of the original advance for the first five years and 3 per cent for the next three years.
“This range has proven popular with advisers and customers alike since it launched earlier this year,” said Alice Watson, head of marketing at Retirement Advantage Equity Release.
“They tend to go down particularly well with people who like the certainty and piece of mind that comes with receiving a cash lump sum but not having to make any interest payments.”
It’s like fancy chocolates on the shelf – the headline rate is the shiny packaging but it is the flavour that counts.Ashley ClarkHowever financial adviser Ashley Clark from Needandadviser.com in Richmond, said although headline rates were one thing, the small print is what is important.
Mr Clark said: “It’s like fancy chocolates on the shelf – the headline rate is the shiny packaging but it is the flavour that counts."
He said that equity release was a growing part of business for advisers. “With an ageing population and the demise of defined benefit (DB) pensions, it is increasingly important.
“The government is looking to this area as a way to deal with the increasing problem of paying for care in older age.”
He said there was a need for more flexible products and innovation in this area, as well as low rates though.
“Equity release is light years away from where it was 20 years ago, so you can already see improvements, but there need to be more changes.”
rosie.murray-west@ft.com
