There is certainly a lot of interest in the later life lending sector these days and this is definitely down to a few main reasons.
In our opinion, the first reason is that much of the wealth in this country is held in property and much of that is held with people over 55. These people have worked hard to maintain mortgage payments, whilst seeing house prices rise over time.
The problem is that unless you want to move home, there is no other way to unlock money tied up within your bricks and mortar.
The second reason is the increasing flexibility and portability of Lifetime Mortgages, making it much more appealing for a broader audience. When you couple this with increased reasons for people to take these types of plans out, it stands to reason that the later life lending market will increase hugely.
The main reason that we feel why Lifetime Mortgages have become so popular is the dramatic interest rate decrease over the last few years.
Advising even less than five years ago a 5% interest rate was exceptional, whereas these days at Viva Retirement Solutions, we are able to offer exclusive rates that started from 2.64% in 2019!
This is a massive difference where the estate benefits dramatically and where more and more people feel very comfortable looking at this kind of lending.
What with the compound interest involved, it was not that long ago that advisers were saying to clients that the interest would double after 10 years or so, whereas now it can take up to 22 years to do exactly the same thing!!!
If you think about this in the context of say a £50,000 loan (which is about half of the average), there “could be” a massive saving of interest for the estate (which can potentially help and this can help) children to support their parents when making big decisions about their finances.
We find that as the rates are fixed for life on the initial loan, there is no affordability assessment unless payment plans have been selected and because drawdown is available for the future subject to lender underwriting, many clients actually choose Lifetime Mortgages over RIOs and conventional mortgages!