Low gilts good news for equity release customers, says More 2 Life
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Low gilt yields could mean lifetime mortgage customers are able to remortgage without paying early redemption charges, according to More 2 Life.
Lifetime mortgage customers can choose between gilt-backed ERCs and those charging a percentage of the initial loan, but typical gilt-backed fees are only payable if the FTSE UK 15 Year Gilts Index is lower than the lender’s benchmark yield when the loan is taken out.
More 2 Life says that with gilt yields currently at an all-time low, lenders will be unlikely to have to impose gilt-backed ERCs.
The firm is urging consumers to choose gilt-backed ERCs in order to improve their remortgage options in the future.
Jon King, managing director at More 2 Life, says: “Low gilt yields have generally been bad news for retirement incomes but they are genuinely good news for equity release customers and brokers.
“In the current market gilt-backed charges are as close as you can get to no ERCs, enabling customers to benefit from remortgaging when the opportunity arises.”
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Readers' comments (1)
Anonymous | 27 Oct 2011 9:00 am
I am assuming Jon King means people taking out a new lifetime mortgage and not customers that are looking for voluntary redemptions on existing mortgages where the benchmark yield was higher than the current yield. This would obviously not be as near to 'No ERCs'
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