Legal & General Home Finance has launched a new lifetime mortgage that pays customers a fixed monthly income.
L&G’s Income Lifetime Mortgage aims to give customers more flexibility in how they access their property wealth in later life, and is aimed at customers who want to supplement their income.
The lender says the new product aims to provide a lifetime mortgage solution for consumers who prefer a fixed monthly income to a lump sum or who haven’t been able to save as much into their pension as they would have liked.
It’s therefore a compelling option for those wanting to bridge a retirement income gap, so that they can enjoy a more comfortable standard of living in later life.
Like L&G’s Flexible Lifetime Mortgage range, interest on the mortgage will roll up over the life of the loan. The loan and interest will be repaid from the sale of their property upon the last surviving borrower’s death or a move into long-term care. However, with an Income Lifetime Mortgage the effect of compound interest is reduced as funds are released in monthly amounts, rather than lump sums.
The product will be available to people aged 55 and over with a minimum property value of £100,000. Customers will be offered an interest rate fixed for life at the outset, while the monthly income from the mortgage will run for an agreed term of 10, 15, 20 or 25 years and cannot be extended.
At the end of the fixed term, the monthly income will stop and interest will continue to roll up until the mortgage is repaid. Consumers can choose to stop this income at any point, but once stopped the income cannot be restarted.
Legal & General Home Finance chief executive officer Steve Ellis says: “Whether it’s paying for a day out with the grandchildren or a weekend away in the country, we know how useful that little bit of extra income could be for so many people to keep them doing the things they love. Our income solution is a new option for these consumers, giving them the chance to enjoy the benefits of their housing wealth with a fixed interest rate for life, but with the security of a regular monthly income for up to 25 years.
“There is a bright future ahead for retirement lending and we want to see more people benefit from the positive role their homes can play in later life. More choice and more flexibility in how consumers access and use their housing wealth are key to that future and to leading more people into a better retirement.”