Last year More 2 Life launched its Interest Choice Plan to help retirees on interest-only mortgages – what has the take up been?
The take up has been excellent which comes as no surprise given the potential size of the market with around 103,000 retired households still paying mortgages. We designed the product following feedback that showed strong demand from people with mortgages who were approaching retirement and need a solution. They can afford to pay the interest on loans but are facing a repayment date when they have to find the capital. The Interest Choice Plan is designed to help them.
The LTV cap on the product is 45 per cent at age 85 – do you have any plans to increase that in the future?
We would love to launch a new plan with higher LTV s and are talking to funders about this. So watch this space.
An influential House of Lords select committee recently pressed the Government to boost the take up of equity release, but it also warned that the current market suffers from “quite considerable” failures. Was this a fair analysis?
The select committee is right that equity release is part of the solution. But it forgets that the industry provides a product with guarantees that cost significantly more than standard mortgages. The analysis also missed the innovation that has happened and is continuing with greater use of drawdown, interest-only solutions and enhanced equity release. We just need new funders and I’d be delighted to hear from them.
What do you think puts off the elderly taking out equity release?
There is an aversion to debt among older people who do not want to borrow money at all and especially not in later life. But that is changing rapidly as the baby boomers have lived with borrowing and have a different attitude which is making equity release more attractive.
What’s the best advice you’ve ever received?
Invest in assets.
What did you dream of doing as a job when you were a child?
Farmer. And I have not given up the dream quite yet.