View more on these topics

Editor’s Note: It’s a lifetime decision

Industry pundits are predicting that more lenders will follow Santander’s lead and link up with equity release providers to offer older borrowers more options in retirement.

It is good news that lenders are looking for solutions to help interest-only borrowers who have not paid off their home loans by the time they retire. News that Nationwide Building Society is extending its maximum age threshold to 85 for borrowers in retirement is also positive for older customers.

The industry does seem to be trying to tackle the “interest-only timebomb” that the City watchdog warned about several years ago. CML figures earlier this year suggested progress had been made.

Although Santander says it will not profit from the tie-up with Legal & General, customers will receive advice from a ringfenced team within Key Retirement who will discuss products only from the one lifetime mortgage provider. Borrowers may ask to be referred onwards to receive whole-of-market advice from Key but, in practice, many may trust their bank to give them a special deal with a partner business and simply take what is initially offered.

Brokers will be wondering whether a direct referral for whole-of-market equity release advice would have better served the interests of Santander’s borrowers. If this is not a commercially driven move, why not make the default option an adviser who can compare all the rates on offer and all the criteria?

L&G’s products are competitive but that is not the only consideration for borrowers looking to secure the best deal.

Opting for a lifetime mortgage is a huge decision and borrowers need to be fully informed to ensure they make the right choice. Given that one of the drivers for this deal is helping interest-only borrowers who took out mortgages without adequate repayment plans, surely the industry needs to be extra careful to ensure these customers make a sensible decision this time around.

The Mortgage Market Review has resulted in more borrowers taking whole-of-market mortgage advice. As the range of options for older borrowers continues to expand in both the conventional mortgage and equity release sectors, whole-of market advice is the only way to ensure customers make the right choices to get the most out of their property in retirement.

Recommended

The AA eyes Q3 mortgage launch

The AA is set to enter the mortgage market in the third quarter, likely under the name ‘The AA Mortgages’. The AA registered the trademark of ‘The AA Mortgages’ last week, according to Intellectual Property Office documents. Last July the AA said it would launch an AA-branded mortgage product in the second quarter of 2016. […]

Andrew Tyrie Tory conf 2013.jpg

Tyrie calls for post-Brexit reforms to capital rules for new banks

The chairman of the Treasury Select Committee has called for the Government to seize the opportunity to ensure that post-Brexit capital rules are fairer on challenger banks. Conservative MP Andrew Tyrie says that Brexit offers the chance to reshape regulation in a way that gives small and new lenders a better chance of success. His […]

Paper-People-Cardboard-Cutout-700.jpg

Northview Group in redundancy talks with 25 staff

Northview Group is in redundancy talks with 25 staff in Kensington and New Street Mortgages as the firm looks to combine functions of both brands. Northview Group distribution director David Finlay and New Street’s sales and distribution director Adrian Whittaker left the firm this week and Mortgage Strategy understands these departures were part of the […]

Life after the CML

By Roy Armitage, head of credit at LendInvest Last month saw three-quarters of the membership of the Council of Mortgage Lenders (CML) vote in favour of plans to create a super-trade body, which would see the CML merge with the likes of the British Bankers’ Association and Payments UK. There is little room for misty-eyed […]

Retirement - thumbnail

Has Britain really stopped saving?

By Steve Webb, Director of Policy and External Communications Our latest policy paper reveals what the fall in the savings ratio does (and doesn’t) mean In June 2017, the Office for National Statistics published its estimates for the ‘savings ratio’ for the first quarter of 2017. This is essentially a measure of the percentage of […]

Newsletter

News and expert analysis straight to your inbox

Sign up