If you’ve worked in later life lending for any length of time, you’ll know the market has never stood still and neither could it. Whether it’s product innovation, regulation, or the changing needs of customers themselves, we’ve always been on a journey – one that has required us to adapt and evolve.
Interest Reward products are a great example of how our sector has responded to that challenge, particularly when it comes to meeting the needs of those who are both willing and able to make repayments in later life.
These borrowers are not looking for a traditional roll-up lifetime mortgage. They also may not be comfortable with the long-term commitment that comes with a Retirement Interest-Only (RIO) product.
What they are seeking is flexibility, control and a structure that rewards them for managing their borrowing, without penalising them if their circumstances change. That’s the space Interest Reward products were designed to fill and it’s where we believe advisers need to be focusing much more of their attention.
Because while these products have been in the market for a while now, their potential is still far from being fully realised. Too many later life recommendations still default to roll-up options without fully testing for affordability or considering whether some form of repayment could actually lead to a better customer outcome. And in an advice landscape shaped increasingly by Consumer Duty, that’s an issue.
Advisers must start by assessing affordability. That’s the gateway to these products. Without it, the customer may never even see the option. And we know from our own experience that a simple income and expenditure exercise can open the door to a whole suite of products – including our Flexi and Tailored Interest Reward lifetime mortgages – that may significantly reduce the long-term cost of borrowing.
A small monthly repayment, even one covering just a portion of the interest, can deliver meaningful savings over time. We had one recent client who by making a £55 per month interest payment was able to save 45 basis points off the rate. If that’s not worth exploring, then I don’t know what is.
So, from more2life we have a number of options. Flexi Interest Reward is our response to the need for flexible repayment options. It’s a product built for those with changing or variable income – people who want to pay something but aren’t in a position to commit to a fixed monthly amount.
With Flexi Interest Reward customers receive an interest rate discount that flexes in line with how much interest they choose to service. It gives them choice without locking them in. And crucially, if they decide to stop paying interest altogether, the loan simply reverts to a standard roll-up with no penalty and no rate shock.
By contrast, Tailored Interest Reward mortgage is designed for clients who do have stable income – perhaps from a defined benefit pension – and who are comfortable making a consistent monthly payment. In return for that commitment, they get access to deeper rate discounts and a more structured product. It’s not about one product being better than the other, it’s about advisers having the right tools to meet the needs of different customer profiles.
There are clear competitive advantages here. Both products convert to roll-up if interest payments stop, offering peace of mind and future-proofing. And the discount structures are built to reflect real affordability, not arbitrary thresholds.
But the real point here is advisers need to be thinking about these options not just for a small subset of their client base but as part of their standard advice process for all over-55s. Particularly those who are approaching the end of an interest-only mortgage term or who are currently on a mainstream deal that may no longer suit their needs. The product options available to them post-55 are far wider than many realise and Interest Reward products should be firmly on the radar.
There’s also a bigger picture to consider. Many over-55s now carry mortgage debt well into retirement. According to recent data, longer-term mortgages – 35 years or more – are on the rise, meaning more people will be in their 70s or even 80s when their terms expire. If we don’t expand the advice lens to include products like Interest Reward, we risk funnelling those customers into unsuitable or unnecessarily expensive solutions.
That’s why our message to advisers is clear: affordability testing shouldn’t be an optional extra, it should be embedded in your approach to every later life case. And when that test shows potential for interest servicing, Interest Reward products offer a powerful solution. They help preserve equity. They offer choice. And they support better customer outcomes — all while aligning with the regulatory direction of travel.
We’ve made it easy to engage with these options. Our adviser tools, webinars, and support materials are designed to walk you through the process, so you can have confident conversations with your clients. Because ultimately, this is about delivering advice that reflects today’s reality, not yesterday’s limitations.
Interest Reward is no longer a niche. It’s becoming central to how we think about borrowing in later life. And as more advisers engage with this part of the market, we believe it will play an increasingly important role in shaping how equity is accessed, managed, and preserved for the future.
Dave Harris is CEO at later life lender, more2life
