Equity release lender More 2 Life has raised the loan-to-value (LTV) rates on products in its Interest Choice Plan by up to 4 percentage points.
The Interest Choice Plan is especially suitable for customers who want to switch from an interest-only mortgage to a lifetime product.
Customers can choose the level of interest they repay on loans while fixing their interest rate and having access to a lifetime drawdown facility. They can choose to pay all or part of the monthly interest on their loan and choose how much to withdraw.
Those who do not take the whole loan-to-value can make further withdrawals. If at any point the client can no longer afford to make the repayments – or simply wants to stop – the loan can be converted to a standard roll-up lifetime mortgage at no extra cost.
Interest payments can only be made on the initial loan amount and cannot be made on subsequent drawdowns.
More 2 Life has now raised the maximum LTVs on the plan to 24 per cent for customers aged 60, from 20 per cent previously. The LTV rate for 75 year olds has been increased to 39 per cent from 36 per cent.
The lender keeps the maximum LTV for 85+ clients at 45 per cent.
More 2 Life says it is seeing growing demand from customers who want to pay interest on equity release loans and retain the flexibility to convert to a standard lifetime mortgage or drawdown later – it does not charge any extra interest to convert.
Dave Harris, managing director at More 2 Life, said:
“People need more flexible options for retirement income and the option of accessing property wealth as the cornerstone of retirement planning will continue to grow. Lifetime mortgages are ideally suited to those who are near or at retirement with repayment shortfalls and low retirement incomes and who wish to remain living in their property.
“The lifetime mortgage market is evolving rapidly and we anticipate increasingly competitive rates and customer product terms to emerge in the next year. The momentum will be supported by falling interest rates and the development of new product types.”
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