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Later life lending embarking on product innovation to beat market blues – Saroya

Paul Saroya

In May, one of our Directors, Paul Saroya was featured in Mortgage Solutions talking about product innovation, in later life lending, in the face of high interest rates.

Here follows the article:

After a period of stability within the later life sector, we have seen swap rates bounce around for a few weeks, inevitably leading to fixed rates rising a little. This always has the knock-on effect where clients consider “kicking the can down the road” which is in itself is always a worthy consideration.

This could have had the effect of scaring lenders and funders into pulling back and almost deciding not to want the business that is out there, as we have seen before from some. But, actually, I would like to highlight what the lenders and funders are doing in the background to make our products even more appealing to even more people.

It has been a leap into the unknown with the newest hybrid products, both aptly named the payment term lifetime mortgage, which are from Legal and General and More2life.

The former bases criteria on affordability of full interest-only payments over a set number of years, and the latter bases criteria on the ability to make capital repayments on the element sitting above what a normal loan to value (LTV) would allow through a lifetime mortgage.

While not setting the world on fire presently, they have already both paved the way to a new set of potential clients, while both making improvements to their offerings. This in turn sets a precedent to other lenders, who no doubt will be looking to offer the next generation of hybrid mortgages.

These hybrid plans look more towards the younger borrowers, giving the usual minimum age of 55 a shove back to start at age 50, but what is there for clients who cannot prove affordability?


Conventional lifetime mortgage market starting to ‘wake up’ to Just ‘J Series’ deals

Well, the lenders in the conventional lifetime mortgage market are starting to wake up to Just “J Series” products, where clients can get an interest rate reduction (sometimes of up to a massive 1% discount) simply by agreeing to make a minimum of 25% of the full interest-only payment.

The way the plan is set up means that if clients could no longer afford their payments, then the plan reverts to the interest rate that it should have been – so clients have peace of mind as well as security of tenure.

This series of plans has been around for quite a while, but it is only now that other lenders seem to be chasing the clients in this section of the market. Standard Life has successfully launched its version, which has gone down a storm, and I am sure that others are set to follow.

These voluntary payment plans help with the immediate need of being able to offer clients better interest rates, while also going at least part of the way to fulfil Consumer Duty requirements.

So, while the outlook remains rocky in the shorter term, the innovation out there is really helping to pull the market back to growth and ultimately appealing to an even wider audience of potential clients.

If you would like to explore later life lending, why not contact us at Viva Retirement Solutions to see how innovations in the market could help you.

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