Legal & General (L&G) has launched an equity release mortgage with borrower guarantees and no monthl...
Legal & General (L&G) has launched an equity release mortgage with borrower guarantees and no monthly payments.
Customers are given guaranteed safeguard against negative equity, eviction and repossession provided their property is 'adequately insured and kept in good repair' ' effectively ensuring they can live in it for the rest of their lives, or until permanently leaving their home.
No monthly payments are made on the product, instead, interest is compounded monthly and added to the loan to be repaid only when the mortgage itself is repaid. Interest is fixed at 7.3% for the life of the mortgage (APR 7.77%).
Customers must be aged 60 or older with a home worth at least £40,000 to qualify.
Mike Bury, managing director of L&G Bank, said: 'With lower investment returns expected over the longer term and pressure on annuity rates, many older homeowners will be looking for alternative ways to support their lifestyles. Using equity locked up in their homes may be a suitable way to do this. The safeguards in our new equity release mortgage mean financial advisers can reassure their customers that no matter what happens, they can continue living in their homes for as long as they want.'
Some IFAs have contacted L&G to be told this product is only available to clients through direct sales. However, L&G has said IFAs are being offered access through a 'managed roll-out.'
Any IFA interested in recommending this product to a client will be vetted by Legal & General before approval is given.
Andy Wild is a reporter for IFA online.
