Halifax is now in the equity release market saying mortgage regulation has forced it to place its retirement home plan in the category of lifetime mortgages.
But some brokers have hit out as the change means the plan is no longer available to mainstream advisers who do not want to get involved in equity release and do not have the necessary qualifications.
Others are questioning whether it is actually a lifetime product because it can be used for purchase as well as releasing equity, and interest is paid monthly rather than being rolled up.
Halifax has offered the retirement home plan for several years but in the past few weeks it says it has re-classified it as lifetime to meet Financial Services Authority requirements.
Halifax senior media relations officer Paul Fincham says: “It is a lifetime product because it is only for people over a certain age and one of its potential uses is to release equity. It fits the FSA’s description of a lifetime mortgage and had to fall under that category.”
The FSA defines a lifetime mortgage as: “A mortgage aimed at those who have assets but not income – typically older consumers – and is designed to release equity from the home. Repayment of the capital, and sometimes the interest, only happens on sale of the property, usually on the death of the borrower.”
A broker, who does not wish to be named, tells Mortgage Strategy: “I don’t see Halifax’s retirement home plan as a lifetime mortgage partly because the interest is paid as it goes along, not rolled up at the end. I was selling a lot of these plans but can’t now.”
He is calling for the lender to launch a product available to all brokers to replace it.
Fincham says Halifax has no immediate plans for such a launch but will take broker feedback into account.
Charcol senior technical manager Ray Boulger says: “I don’t think this qualifies as a lifetime mortgage. One requirement is that there can be no repayment of interest while the property is the client’s main residence.”