Canada Life Home Finance has launched a product range allowing homeowners to overpay by up to 10 per cent of the initial loan amount each year without penalty.
The Capital Select Options range is one of Canada Life’s first in the lifetime mortgage market since it acquired equity release provider Retirement Advantage at the start of the year.
The range allows repayments of between £50 to a maximum of 10 percent of the initial loan amount each year without incurring an early repayment charge (ERC).
It also gives an early repayment waiver if after three years the first borrower dies or goes into long term care. ERC is waived if the customer wants to downsize.
In addition, if borrowers wish to repay their mortgage ERCs are only fixed for the first eight years.
The annualised interest for the Capital Select Gold product is 4.35 per cent. This will increase by 0.21 percentage points if the cash reserve option is chosen.
Loan to Value (LTV) amounts for those aged 60 start at 18 per cent, going up to 38 per cent for 80-90 year olds. LTVs reach 48 per cent on Capital Select Platinum.
According to Canada Life, the product range has the flexibility to meet the evolving needs of lifetime mortgage customers, including those concerned about rolled-up interest reducing the equity in their home, or homeowners over the age of 55 who require a lump sum but are still receiving an income.
Daniel Bailey, director at Middleton Finance, said: "It is welcome news that Canada Life are going to allow borrowers to make overpayments. Some clients do have concerns about the rolled up interest and like to know they have the facility to make overpayments if they want to."
The features are available immediately on Capital Select Gold, Gold Plus and Platinum products.
Alice Watson, head of marketing and communications at Canada Life Home Finance, said: "By adding ways to increase the flexibility in our lifetime mortgages we aim to give customers greater control of how, when and if they repay their loans. The choices can be made by the customer and their adviser."
She added: "Although people borrow at a certain point in time, lives change. Circumstances change."
Jenny Turton is a freelance writer for FTAdviser
