Lender More2Life has launched two equity release plans with fixed early repayment charges, to replace two of its current plans that charge gilt-based ERCs.
ERCs in the first year of the lender’s new ‘Tailored Enhanced’ and ‘Tailored Lifetime’ plans will start at 10 per cent, decreasing by 1 per cent each subsequent year. The ERC will remain at 1 per cent until the 15th year of the loan, and then 0 per cent thereafter.
However, borrowers can make partial repayments of up to 10 per cent each year under the lender’s Tailored plans, without incurring an ERC.
Some lifetime mortgage lenders base ERCs on gilt yields, which can rise and fall, as an indicator of long-term interest rates over the duration of the loan.
Applications for the gilt-based ‘Tailored Plus’ and ‘Tailored Lite’ plans will be accepted until the end of August 18.
Stuart Wilson, corporate marketing director at More2Life said: “While gilts can offer some customers a good deal depending on the timing of redemption, for borrowers who would like greater control over repayments – particularly in the current climate – the refreshed Tailored range will give them exactly that”.
Additionally, the lender is updating criteria across its ‘Tailored’ range, including raising the maximum loan amount to £800,000 for properties in England, from £600,000. Flats above, or adjacent to, commercial properties can also be referred to the lender.
Mr Wilson added: “Product innovation and development will continue to be a top priority at More2life, particularly as the coronavirus crisis progresses and customers look for greater flexibility in how they choose to support themselves in later life”.
Steve Paterson, director at Later Life Money said: “The fixed ERC offering on this range of products will be welcomed by advisers and clients alike. Having a known exit penalty and specific timescales can only be a good thing and shows how far the market has come in recent years”.