Extra flexibility and interest rate discounts for homeowners
Written in line with our editorial policy.
Pure Retirement has introduced an interest-servicing option on its Heritage lifetime mortgage range. Borrowers can now reduce their future loan balance and benefit from interest rate discounts.
By making monthly payments towards the interest on their lifetime mortgage (the most popular form of equity release), customers have more control over the cost of their equity release. Making interest payments reduces the overall debt and protects more of the equity in their home for passing on to beneficiaries.
A key benefit of the new option from Pure Retirement is the interest rate discount available to those making monthly payments. Depending on how much of the monthly interest the homeowner chooses to pay – between 25% and 100% – they can receive a discount on their interest rate of up to 1%.
The option is flexible, too. If circumstances change, borrowers can stop making payments at any time without penalties. Additionally, they can take up to three months off each year with a payment holiday.
This interest-servicing option is available on both lump sum and drawdown lifetime mortgages. Customers can also make payments on interest from drawdowns or further advances.
In addition, up to six voluntary partial repayments of the loan itself can be made each year without incurring early repayment charges. There is a minimum of £500 per payment, totalling up to 10% of the advance amount per year. This gives homeowners the opportunity to reduce the original loan in addition to servicing the interest.
According to Mortgage Strategy, Chris Buchanan, Pure Retirement’s head of product, said:
“The lifetime mortgage market is evolving to meet more diverse customer needs and circumstances. Our ambition was to develop a leading interest servicing lifetime mortgage, with interest rate discounts delivering meaningful customer savings, but at the same time keeping it simple for advisers and customers, with no complex payment term commitments to navigate.”