The fixed product sits somewhere between a lifetime mortgage and a home reversion. Many may struggle to get the concept across to a client, and then struggle to get the client to grasp the real issues of life expectancy – something Just has utilised well in its enhanced annuity offerings.The real plus of Just’s launch is its roll up product. LTVs are in line with other roll ups but this marks the launch of the first lifetime mortgage that at outset will not discriminate against those who want a drawdown facility. Existing schemes, including the scheme that goes live from Prudential on October 17, charge a higher interest rate at outset for the privilege of the drawdown facility. This distorts the products’ potential benefit of interest savings in compared with taking all the funds at outset. Just provides not only a lower rate than the competition for the drawdown facility but, whether the client is opting for a single advance or an initial advance, with drawdown they will attract a rate of 5.99% annualised. This is 0.16% lower than the best fixed rate for single advances from Portman and 0.65% lower than Prudential’s annualised launch rate. And this at a time when providers are saying the rate war has ended. Where providers, including Just, are still letting us down is in the direction early repayment charges are heading. Roll up ERC can be as high as 20% of the cash advance or as low as 0%. The ERC is linked to a 15-year gilt rate. In real terms, this is a potential avoidance reason for anyone who may want to repay early. At a time when ERCs for equity release are creeping into the spotlight, this could be a thorn in their side. But a client happy to accept this will be in a position whereby buying the facility to have a guaranteed drawdown option becomes a viable consideration. The difference in cost between Prudential and Just on an initial advance of 30,000 for a client who does not end up using the drawdown facility over a 20-year period is almost 12,500 in additional interest with Prudential.Dean Mirfin is business director at Key Retirement Solutions
- Top trends
Conti Financial Services is currently celebrating over 11 years as one of the UK’s leading brokers of overseas mortgages. Simon Conn, managing director of CFS says: “we now arrange mortgages in over 30 countries, where over 200 schemes have been negotiated with either local or offshore Lenders, which include a number of exclusive products and […]
The Mortgage Times and BM Solutions have launched a new buy-to-let product which will enable them to secure mortgage finance which they may otherwise miss out on.The yield for the buy-to-let product is calculated at 0.39% above the Bank base rate as opposed to the usual BM Solutions rental yield of 0.75% above the Bank […]
North Yorkshire, Ryedale and Hambleton Councils are to be given help with meeting the costs of clearing up following severe storm and flood damage in the council areas on June19 2005.The pledge was announced today by Jim Fitzpatrick, the parliamentary under secretary of state, in a written statement to Parliament. Mr. Fitzpatrick says: “Large areas […]
Seems almost impossible not to be drawn into talking about HBOS this week doesn’t it?
In last year’s FCA thematic review of the mortgage market, one of the key things highlighted was the “savvy consumer”. That’s the client who comes in the door with a very clear idea of what they need and expect you to get them it. They don’t think they need advice, they have after all consulted […]
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