Standard Life Home Finance has introduced a new facet to its popular ‘interest reward’ equity release scheme. This latest innovation, dubbed the Horizon Interest Reward product, is designed to attract a broader audience by offering a more flexible way for homeowners to manage the financial implications of tapping into their home’s equity.
A Fresh Take on Equity Release
Launched with much anticipation in January, the Horizon Interest Reward product now features a 25% interest served option. This approach allows customers to pay off 25% of their loan’s interest over a predetermined timeframe, in return for a significant reduction in the standard lifetime mortgage rate. It’s a strategic move aimed at lessening the overall financial burden for those who opt into the scheme.
Previously, Standard Life’s equity release products were limited to discounts for customers able to repay 50% or 100% of their interest. This new 25% repayment option broadens the horizon, offering more homeowners the opportunity to benefit from reduced rates without the pressure of higher repayment commitments.
How It Works
The discount a customer receives is directly tied to the portion of interest they agree to pay and the duration of their agreement. By choosing to service just a quarter of the interest on, say, the Horizon 300 plan, a homeowner can secure a rate discount ranging from 0.03% for a five-year term to 0.09% over 15 years. On the higher end, fully covering the interest on plans like the Horizon 530-620 can unlock a 0.75% discount over 15 years.
This model not only makes equity release more appealing but also significantly reduces the cost of borrowing, enabling homeowners to save money over time.
Eligibility and Benefits
Open to individuals aged between 55 and 84, these plans come with a ‘no negative equity guarantee’. This ensures that the amount to be repaid will never exceed the value of the home. Furthermore, customers are given the flexibility to make additional voluntary repayments. Up to 10% of the initial loan amount can be repaid annually without incurring any extra early repayment charges (ERCs), providing an additional layer of financial control and peace of mind.
A Word From the Experts
Kay Westgarth, Standard Life Home Finance’s sales director, emphasises the importance of evolving product ranges to meet the changing needs of later-life borrowers, “As the typical profile of later-life lending customers evolve, so too must the range of products available to them. This latest update to our Horizon Interest Reward product will enable more homeowners to benefits from lower interest rates and larger discounts. The next generation of homeowners are likely to lean on later-life lending to support their mortgage repayments throughout their life, and so we are committed to offering flexible and affordability-centred options. Advisers play a crucial role in laying out all of the options available to customers to make sure people take out the right products that meets their personal needs.”