Equity Release  

Saga launches monthly drawdown lifetime mortgage

Saga launches monthly drawdown lifetime mortgage

Saga has launched an equity release product allowing customers to take monthly tax-free payments from their property. 

The provider has introduced the lifetime mortgage product following customer feedback and contrasts the alternative lump sum payments available elsewhere in the equity release market.

The Saga regular drawdown lifetime mortgage is available to those aged 60 to 80 and borrowers must take an initial lump sum of £10,000 to be followed by minimum monthly payments of £200.

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The product offers monthly payouts for a minimum of five years and a maximum of 18 years, depending on the age of the customer.

Customers can review interest on upcoming payments on a yearly basis and can change the value of monthly payments and release further lump sums annually. 

Alex Edmans, head of product at Saga Money, said she believes the economic situation over the past decade has left many people on a fixed income feeling the squeeze.  

She said: "Our research has shown that people are increasingly viewing their property as an asset which rightly forms part of their retirement planning.

"Our customers have consistently told us that they want a solution that enables them to stay in the home they love, but to use it as a way of generating additional monthly money.

"For many that means they can pay their bills or financially support their children, whilst others can go out and socialise with friends a little more often or treat themselves occasionally."

Ms Edmans said she feels the equity release industry requires further innovation and believes the launch of Saga's regular drawdown mortgage will challenge the market.

She said: "It is important that homeowners explore all of their options, so we offer a free full financial review to ensure that they do just that."

Gary Webster, head of partnerships and independent equity release adviser at Equity Release Supermarket, said: "As part of any consumer retirement income strategy we welcome new flexible options introduced by providers to achieve positive consumer outcomes.

"It is very difficult to gauge demand for a regular monthly income plan versus the current ad hoc drawdown lifetime mortgage schemes offered in the market, but I do expect other lenders to follow suit.

"However a note of caution, a regular income plan could have a negative impact on means tested benefits for some borrowers."