Standard Life Home Finance has announced a new initiative that could see customers saving money on their mortgage payments. The company is introducing a novel approach to equity release, aiming to provide more flexible and financially rewarding options for its customers. This move is especially tailored to those in their later years, offering a blend of benefits that could change the way you think about your mortgage.
A Fresh Approach to Lifetime Mortgages
Standard Life Home Finance is changing its Horizon later life lending offering by introducing a discount for customers who agree to make regular payments on their lifetime mortgage. This initiative, named Interest Reward, departs from the traditional equity release models by encouraging customers to pay a portion of their interest regularly, which could lead to significant savings over time.
What’s on Offer?
The new Interest Reward scheme is designed for equity release customers who are willing to commit to making regular payments towards their mortgage interest. Unlike traditional models that often rely on voluntary payments, this structured approach aims to reduce the compound interest on mortgages, making it an attractive option for both seasoned equity release customers and newcomers alike.
Customers who opt into this scheme will benefit from a discount on their mortgage interest rate. The size of the discount varies, depending on how much of the interest is paid and the length of the payment commitment. For instance, a customer who agrees to a five-year plan paying off 50% of the interest owed could enjoy a reduction of 0.05% in their interest rate over time.
Who Can Benefit?
The Interest Reward product is available to customers aged between 55 and 84, offering flexibility for a wide range of financial needs, including remortgaging, purchasing, capital raising, and debt consolidation. It’s part of the Horizon 300 and above plans, ensuring a broad segment of customers can access these benefits.
Moreover, the plan includes a no negative equity guarantee, safeguarding customers from owing more than their home’s value. There’s also room for flexibility, allowing for additional voluntary repayments of up to 10% of the initial loan annually without extra charges.
Kay Westgarth, the sales director at Standard Life Home Finance, highlighted the importance of evolving the later life lending industry to meet the changing needs and expectations of customers, “As the later life industry continues to evolve in lockstep with customer demand and regulatory reform, the need for a more diverse and comprehensive product offering has never been more profound. We are thrilled to be able to offer this new Interest Reward product to customers, providing a payment option that rewards customers who commit to regular payments with a discount on interest rates. Given the current climate this payment plan is our way of ensuring equity release customers can access the rates that best suit their individual financial situation.”