New Lifetime Mortgage Option Bridges the Gap for Pre-Retirees

More2life has introduced the Flexi Payment Term lifetime mortgage (Flexi PTLTM). This innovative product is strategically designed to serve as a middle ground between traditional full interest-servicing mortgages and complete roll-up lifetime mortgages, aiming to provide a more tailored financial solution for homeowners.

The Flexi PTLTM targets homeowners aged between 55 and 62, offering a unique opportunity for those able to pay part of the mortgage interest. This approach allows access to higher loan-to-value (LTV) ratios than those typically available through a full roll-up lifetime mortgage, thus enabling customers to leverage their property’s value more effectively.

With the flexibility to choose from various committed payment levels, which correspond to different increases in LTVs, advisers can now craft more personalised strategies to meet the specific financial needs and goals of their clients. This customisable approach ensures that homeowners can make informed decisions that reflect their unique circumstances.

Mortgage Flexibility

Initially, the Flexi PTLTM requires homeowners to make contractual repayments of partial interest up to the age of 66. After this period, the mortgage transitions into a roll-up mortgage, where no further repayments are required, and the interest is added to the loan amount. However, the plan also accommodates additional voluntary payments, both during the contractual repayment phase and afterwards, offering further flexibility to manage the loan.

For customers who qualify for high LTV lifetime mortgages on a full roll-up basis, the Flexi PTLTM presents an advantageous alternative. It allows for a significant reduction in the total cost of borrowing, illustrated by a comparative scenario: releasing £67,210 from a property valued at £286,000 with the Flexi PTLTM at a 6.11% MER results in a total cost of £297,460 over 11 years, as opposed to £393,796 with a standard 8.79% MER roll-up mortgage.

Ensuring Suitability and Security

The introduction of the Flexi PTLTM underscores more2life’s commitment to broadening the spectrum of products available to older homeowners, addressing a gap in the market for those with partial repayment capacity. The product’s suitability hinges on individual circumstances and affordability, with advice mandatory to ensure that homeowners make decisions that are in their best interest. Additionally, the plan includes a no negative equity guarantee, ensuring that borrowers will not owe more than the value of their home.

Ben Waugh, Managing Director at more2life, highlighted the company’s dedication to innovation and customer service, stating, “As the later life lending market grows, so do the needs of our clients. We are committed to developing new products to support those who might otherwise be underserved by the industry.” Waugh’s comments reflect a broader industry trend towards more flexible, customer-centric financial solutions, particularly for those approaching retirement age.

Looking Ahead

With the initial launch focused on a specific age group and payment terms, more2life plans to expand the Flexi PTLTM’s availability and options throughout 2024. This expansion aims to cater to a broader demographic, further enhancing the company’s offering in the competitive later-life lending market.