Equity release provider Hodge Lifetime has reduced the interest rate on its five-year fixed rate retirement mortgage to 4.39 per cent from 4.75 per cent.
T
he overall cost for comparison is 4.7 per cent APR although the actual rate available will depend upon borrowers’ circumstances.
Hodge Lifetime’s retirement mortgage is an interest-only lifetime mortgage for homeowners over the age of 55 and works a little differently to traditional equity release products. Borrowers pay the interest on a monthly basis – instead of paying the interest at the end of the mortgage term when the whole loan is paid back.
The actual amount you borrow, known as the loan capital, can be repaid from the proceeds of selling the property and does not have to be repaid until the borrower dies or moves permanently into long-term care.
Deian Jones, managing director of Hodge Lifetime, said: “As options for customers looking to borrow in retirement have reduced, especially on an interest-only basis, this latest rate reduction offers advisers a competitive and flexible solution for those customers.”
Dominik Lipnicki, director at brokerage Your Mortgage Decisions, commented: “Post 2008 and in particular post MMR [Mortgage Market Review], it has become nearly impossible to help clients past retirement, especially if interest-only borrowing is required. Hodge Lifetime helps to fill that product void.
“What most would find surprising is just how low the interest rate is, even lower than the SVR [standard variable rate] with Santander. This is no longer what some would perceive as lending of last resort. Hodge Lifetime products plug a real gap in the market; in essence, they help borrowers, which high street lenders chose to ignore.”
