A complicated addition to the market

You might well wonder about the name Stonehaven and its background. Well, Stonehaven is the newest entrant in the equity release sector and it has not come to market without considerable preparation. As it launches its trial with a number of introducers, Stonehaven as well as the rest of the market will be looking to see whether it has got its offering right.

Stonehaven is the first lender of recent times to attempt to offer a wide range of options. Is this model right?

The first option – its lump sum and lump sum plus products – offers standard and higher LTVs. Its regular cash release and flexible cash release deals offer drawdown facilities. The first allows regular payments monthly, quarterly, half-yearly or annually. Flexible cash release offers the facility for ad hoc drawdown but this is limited to a secure 50% of the overall facility, which may prove less attractive to clients wanting to secure more defined funding.

Stonehaven has introduced an interest-only option similar to that provided by Scottish Widows, which allows interest to be paid initially with a switch to roll-up later. This option could be beneficial for clients who want to service their loan for an initial period. A date to change has to be agreed and this may prove too restrictive for people who are not sure of when they would like to switch. That said, this option will be a welcome one for some, in principle.

Stonehaven’s offerings also provide a protected equity option which, for lifetime mortgages, has only previously been available from Northern Rock. The benefits of this are clear but it will limit the LTV available which has historically proved to be its weakness.

To pull all the options together Stonehaven offers a ‘build your own’ facility which allows the client and adviser to piece together a plan from the options available.

Interest is calculated monthly with rates starting from 6.02% (6.19% annual). This does not put them at the top of the table but time will tell if the flexibility of the products outweighs that.

For a long time, consumers and advisers have been asking for flexibility but for this to come without complexity. To some, Stonehaven’s product structures may appear to be too complex in a market where simplicity can be king.