Key Later Life Finance has launched a new Payment Term Lifetime Mortgage (PTLTM), as it aims to address demand from underserved customers.
The new lifetime mortgage offers higher loan-to-values (LTVs) and increased flexibility, enabling borrowers to address later life borrowing needs while reducing the total cost of the loan.
Key’s launch is aimed at homeowners who may be struggling to meet increased monthly mortgage repayments, as fixed rate deals end.
The new payment-term lifetime mortgage is a new type of equity release enabling older homeowners to release more tax-free cash at a lower rate of interest than would otherwise be possible with a standard lifetime mortgage.
Borrowers have to commit to a period of mandatory payments which last until the oldest applicant’s 66th birthday but payments only have to be a partial monthly interest payment, making the monthly cost more affordable than a standard residential mortgage or a retirement interest only mortgage (RIO).
The new plan increases the product options for mainstream mortgage advisers and equity release specialists supporting customers aged 50-plus looking to borrow into retirement.
The new Payment Term Lifetime Mortgage can provide an LTV boost of up to 8% – worth more than £23,000 on an average property – and is initially designed to support ‘younger’ later life homeowners who may be in a transitional period between ending full time work and full retirement.
Will Hale (pictured), CEO at Key said: “The new payment term lifetime mortgage addresses a growing group of older borrowers who are struggling with their monthly mortgage payments.
“All advisers, both mainstream mortgage advisers and equity release specialists, must broaden their offering and consider all options for customers over 50 looking to borrow into retirement.
“The new product gives customers access to more of their home’s value while ensuring they remain protected throughout later life, even if their circumstances change.
“Making some mandatory repayments in pre-retirement is a sensible thing to do for many borrowers as this can significantly reduce the cost of borrowing and can provide greater financial flexibility in the future.”
He added: “We are confident our revised approach to advice covers a holistic range of product types for customers, so they can feel confident in our advice recommendations.
“We are focused on leading the way in advice for the new later life lending market.
“We will continue evolving our approach on products and advice to keep pace with changing needs, a growing market, and the heightened expectations of Consumer Duty.”
