LV has introduced a time-limited cashback deal on its two lifetime mortgages.
The provider is offering cashback of 1 per cent on its drawdown and lump sum products until April 16.
The cash will be paid to borrowers on completion and in addition to the loan amount, increasing the maximum funds available.
Customers can choose how the money is used, such as to reduce the size of their lifetime mortgage loan, with a lower LTV linked to a lower interest rate, according to the provider.
For borrowers releasing equity as a lump sum, the cashback offer is only available for loans over £50,000.
David Stevens, savings and retirement director at LV, said the option was launched following feedback from financial advisers.
The provider added that a number of larger advice firms said the use of a cashback product was seen as a popular option for a number of their clients.
Stevens commented: “This development will give more flexibility to advisers and their clients so that cost-effective solutions can make the extra money work harder to achieve their individual goals.
“This initial offer forms part of a series of improvements planned to make LV= more competitive in the equity release market.”
According to figures from Moneyfacts, four in 10 lifetime mortgages (38 per cent) currently offer cashback, from six out of nine lenders.
Martin Wade, director at Access Equity Release, commented: “Cashback always sounds attractive and certainly has its advantages in the fact that it attracts no interest. That said, there is no such thing as a free lunch, or very rarely indeed.
“Where there are comparable deals, one with cashback and one without, it is crucially important that the adviser is aware of how to calculate the overall cost to pay on both options as mathematically, there will be a clear advantage with one deal over the other and it is important to be able to explain that to the client and evaluate the benefit of that in relation to the overall product offering.”
chloe.cheung@ft.com
What do you think about the issues raised by this story? Email us on FTAletters@ft.com to let us know.
