Legal & General has launched a new lifetime mortgage that gives customers more flexibility in how they use their housing wealth in later life.
The Income Lifetime Mortgage provides customers with a regular monthly income over a fixed term to help them maintain the lifestyle they want in retirement.
The new product aims to provide a lifetime mortgage solution for consumers who prefer a fixed monthly income to a lump sum or who haven’t been able to save as much into their pension as they would have liked, or their pension may not have lasted as long as they hoped.
Like Legal & General’s Flexible Lifetime Mortgage range, interest on the mortgage will roll up over the life of the loan. The loan and interest will be repaid from the sale of their property upon the last surviving borrower’s death or a move into long-term care. However, with an Income Lifetime Mortgage the effect of compound interest is reduced as funds are released in monthly amounts, rather than lump sums.
The product will be available to people aged 55 and over with a minimum property value of £100,000. Customers will be offered an interest rate that is fixed for life at the outset, while the monthly income from the mortgage will run for an agreed term of 10,15, 20 or 25 years and cannot be extended. At the end of the fixed term, the monthly income will stop and interest will continue to roll up until the mortgage is repaid. Consumers can choose to stop this income at any point, but once stopped the income cannot be restarted.
As with Legal & General’s other lifetime mortgages, customers will need to speak with an adviser who can help them to determine whether the Income Lifetime Mortgage is the right solution for their retirement plans. Customers will need to consider the option carefully, as it could affect their entitlement to means tested benefits, L&G added.
Steve Ellis, CEO, Legal & General Home Finance, said: “Listening to the needs of Britain’s retirees and finding new ways to help them enjoy the retirement they want is central to everything we do at Legal & General. From offering consumers a lifetime mortgage that allows them to make interest repayments to providing solutions for interest-only mortgage holders, we’ve always sought to deliver on the needs of Britain’s over-55s. Now, our research shows there is a segment of older homeowners who want to use their housing equity in later life, but who also want the discipline of a regular income.
“Whether it’s paying for a day out with the grandchildren or a weekend away in the country, we know how useful that little bit of extra income could be for so many people to keep them doing the things they love. Our income solution is a new option for these consumers, giving them the chance to enjoy the benefits of their housing wealth with a fixed interest rate for life, but with the security of a regular monthly income for up to 25 years.
“There is a bright future ahead for retirement lending and we want to see more people benefit from the positive role their homes can play in later life. More choice and more flexibility in how consumers access and use their housing wealth are key to that future and to leading more people into a better retirement.”