UK equity release lender Standard Life Home Finance is to add to its Horizon later life lending offering with a new take on the traditional fixed-rate lifetime mortgage product.
Customers who are willing to commit to agreed regular payments for a set period of time will qualify for a discounted rate for the duration of a mortgage.
Interest Reward is aimed at equity release customers who can commit to making regular payments instead of the traditional voluntary model. The ability to make these payments to lower compound interest may also appeal to borrowers considering equity for the first time.
Customers who commit to agreed regular payments will unlock discounts that vary depending on the percentage of the interest served and the length of the contractual term. For example, a customer who commits to a five-year payment plan paying 50% of the interest owed could receive a discount of 0.05% over time.
Kay Westgarth, sales director at Standard Life Home Finance, said: “As the later life industry continues to evolve in lockstep with customer demand and regulatory reform, the need for a more diverse and comprehensive product offering has never been more profound. We are thrilled to be able to offer this new Interest Reward product to customers, providing a payment option that rewards customers who commit to regular payments with a discount on interest rates. Given the current climate this payment plan is our way of ensuring equity release customers can access the rates that best suit their individual financial situation.”
The product will be available on Horizon 300 and above plans and will be open to applications from any customer between the ages of 55 and 84. Customers will be able to borrow for a wide range of funding purposes, including remortgaging, purchase cases, capital raising, and debt consolidation.
The offering will also include 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.
In addition, clients will have the option to also make additional voluntary partial repayments. Up to 10% of the initial loan can be paid back in a non-overlapping 12-month period with no additional ERCs.
Westgarth added: “We look forward to working closely with advisers to ensure our equity release customers can take full advantage of the Interest Reward product, whether it’s to bolster their current finances or to fund a comfortable retirement. A contractual payment plan may not suit everyone but it’s our duty to ensure that we continue to support the unique needs of a wide range of customers and their differing financial situations.”
