Responsible Lending improves reach of lifetime mortgages

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Responsible Lending has increased by half the number of LTV bands on which it offers drawdown facilities to younger retirees.

The lifetime mortgage provider believes its move to extend this feature to customers with larger borrowing requirements will mean “many thousands more customers a year will benefit from the flexibility it offers”.

Responsible Lending previously offered customers aged 55 to 64 a drawdown option across six of the lender’s 12 LTV bands but the facility will now be extended to the first nine bands.

The bands dictate the interest rate available to borrowers, based on a sliding scale that takes into account the size of the overall loan (including agreed drawdown facility) and the age of those making the application.

The provider says that, in real terms, it’s the equivalent of those aged 55 being able to choose a drawdown option on a lifetime mortgage up to an LTV of 22.5% for joint applications, a significant rise on the previous 17.5% limit. The maximum LTV eligible for drawdown for a single applicant aged 64 rises from 28% to 34%.

Customers aged between 65 and 84 were previously offered drawdown on the first seven LTV bands, and this has also been extended to LTVs 8 and 9. This means that a couple, both aged 70, will be able to elect a drawdown facility on loans up to 39% LTV, rather than 35%.

The lender is also introducing drawdown to its Premier range for the first time. Responsible Lending’s Premier products cater to customers releasing up to £2 million on higher value properties. Drawdown for these customers will be available between LTVs 1 to 6.

The minimum initial advance remains £10,000 for standard drawdown products, rising to £100,000 for Premier products.

Responsible Lending’s products are available through later life mortgage broker Responsible Life.

Steve Wilkie, executive chairman of Responsible Group, said: “We’re constantly looking to boost flexibility for customers, and improvements like these will continue to dramatically expand the reach and appeal of lifetime mortgages.

“At one time, drawdown was a novel innovation but it is increasingly seen as a must-have by many customers. Drawdown allows borrowers to have the best of both worlds, giving them unrivalled flexibility and peace of mind, particularly when they are newly retired. Brokers and advisers are keen to see this option made as widely available as possible. We can see the huge demand for drawdown and we’ll continue to design these products around the end customer.”

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