According to Saga, the Regular Drawdown Lifetime Mortgage is the first of its kind on the market, and is breaking new ground because customers take monthly payments, which can help combat the squeeze in their retirement income.
Homeowners can choose how much money they would like to receive each month, with a minimum of £200. This enables them to have more control over their finances as they have the choice to increase or decrease their payments each year to suit their needs.
The equity release plan charges less interest than alternative lump sum or drawdown products, said Saga.
Pension shortfall
The product comes after Saga’s research found 40% of people feared their pension pot was not as big as they expected and one in three had not planned their finances in advance. Many were also concerned about leaving an inheritance to their children but others said unexpected costs were in danger of threatening their enjoyment of retirement.
What’s more, those with debt in retirement were spending a large proportion of their income paying it off, Saga said.
It was these findings, as well as extensive feedback from customers, which led to the launch of its lifetime mortgage product.
Using property for retirement planning
Alex Edmans, head of product at Saga Money, said: “Our research has shown that people are increasingly viewing their property as an asset which rightly forms part of their retirement planning.
“Our customers have consistently told us that they want a solution that enables them to stay in the home they love, but to use it as a way of generating additional monthly money.
“For many that means they can pay their bills or financially support their children, whilst others can go out and socialise with friends a little more often or treat themselves occasionally.”
Saga stressed it was important homeowners explored all options and it offered a full financial review to ensure they considered all avenues.
It encourages family members to get involved in the decision, where appropriate, to ensure everyone is happy.
Edmans added: “I’m pleased to say in many cases our review service has helped past customers to find other options that might better suit them, however for those who would like to pursue equity release, they can do so with confidence.”
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