more2life has launched its new Flexi Payment Term Lifetime Mortgage (Flexi PTLTM) product.
The Flexi PTLTM was designed to bridge the gap between full interest serving mortgages and full roll-up lifetime mortgages.
In particular, the Flexi PTLTM is tailored to help customers between the ages of 55 and 62 who can commit to serving part of the interest to gain access to higher loan-to-value (LTVs) than would normally be available in a full roll-up lifetime mortgage.
A selection of committed payment levels and associated increases in LTVs are available to enable advisers to select the right combination for their client’s individual needs.
The Flexi PTLTM was developed to reflect the recent change in the Financial Conduct Authority (FCA) handbook for products of this type.
The plan will initially require contractual repayments of partial interest to be made up to age 66, before ceasing and continuing as a roll-up mortgage.
Additional voluntary payments can be made both during and at the end of the contractual repayment period.
In addition, the plan can be used by customers who could already access a high LTV lifetime mortgage product on a full roll-up basis to reduce their total cost of borrowing.
For example, if a later life borrower releases a total of £67,210 from a property valued at £286,000, a Flexi PTLTM paid at an interest rate of a reduced 6.11% MER will amount to a total cost of £297,460 over a payment term of 11 years.
In comparison, the highest LTV lifetime mortgage paid at a standard 8.79% MER will amount to a total borrowing cost of £393,796 over an identical period.
Suitability for the product will depend on individual circumstances and affordability, and is available on an advised basis only.
In particular, it is important to note that full security of tenure associated with lifetime mortgages generally is conditional on the customer maintaining the contractual payments to the plan.
The product includes a standard No Negative Equity Guarantee, meaning that the applicant and their estate will never owe more than the property is worth after it is sold on the market, subject to terms and conditions including deduction of any missed payments.
Ben Waugh, managing director at more2life, said: “As the later life lending market grows, the needs of our clients have changed.
“We are committed to developing new products to support people who might otherwise be underserved by the industry.
“Our Flexi Payment Term Lifetime Mortgage offering partial interest serving is a new concept in later-life lending and is the initial step in our efforts to expand the range of later life products.
“Whilst the initial scope is limited, we expect to extend both age ranges and payment terms available during the course of 2024.”
Waugh added: “It’s vital that everybody can access the best product for their individual circumstances, and advisers must be having in-depth conversations with their customers that cover the entire range of products on the market.
“Our Flexi PTLTM product fills an important gap and will ensure that advisers can deliver fantastic outcomes for clients utilising affordability that a customer has for mandatory payments to access higher LTV’s or reduce their total cost of borrowing.”
