OneFamily Lifetime Mortgages

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1 OneFamily Lifetime Mortgages OneFamily Lifetime Mortgages

2 Agenda Introduction to OneFamily Customer needs Our products OneFamily Lifetime Mortgages

3 About OneFamily Family Investment + Engage Over 2 million members benefit from our simple, good value life insurance, health and savings products 7 billion of assets under management Award winning 50+ Insurance

4 What does the customer need? Residential Market Equity Release Market Short term product Long term product Lifetime mortgage = Lifetime term? Option to repay interest and/or capital

5 Customer needs Re-financing or raising new capital? Type of advice Afford payments selection and risk Intention to repay e.g. downsizing Product flexibility

6 Our products Interest Roll-up Lifetime Mortgage No interest payments are required and instead the interest is compounded and added to the loan each month Voluntary Payment Lifetime Mortgage As per roll-up, however the customer has the option to make voluntary payments each year, up to 10% of the initial loan Interest Payment Lifetime Mortgage Customer has the choice of paying all, or some of the interest each month, for a period of their choice Choice of variable or fixed interest rates Fixed Early Repayment Charges 6

7 Common features Minimum loan size 10K Maximum 750K Minimum property value 70K Maximum Unlimited refer above 2M Ex-LA Flats above 250K (Above 66% occupancy) Accept satisfied CCJs and Defaults Minimum age 55 Maximum age 100 Further advances minimum of 4000 Early Repayment Protection In the form of Downsizing Protection. No ERC payable for customers who wish to fully redeem their loan when they sell up after five years Available for purchase and re-mortgage Members of the Equity Release Council

8 ERCs and Pricing ERCs fixed for 10 years 6% fixed for 5 years, 3% for remaining 5 years Option of fixed or variable interest rates Variable rate calculated as 2.50% % + CPI Rate change annually in December CPI change calculated from October- September Available on ONS website Variable rate cap 7.50% %

9 Product LTVs 55 Lite LTV LTV age 55 Lite LTV LTV age Single 16% 46% Joint 15% 45% Standard LTV LTV age 55 LTV age 85 Single 21% 50% Joint 20% 50%

10 Voluntary Payment Lifetime Mortgage Voluntary payment of up to 10% of the original balance each year Unlimited payments throughout the year by Standing Order, Debit Card, cheque or bank transfer Payments commence as soon as the mortgage has completed The annual allowance is renewed on the anniversary of the mortgage and cannot be carried forward Additional borrowing payments can be made as soon as the loan has completed Minimum payment of 25

11 Interest Payment Lifetime Mortgage Payments of up to 100% of monthly interest minimum 25 Interest payment term from year one up to the lifetime of the loan Selected payment may be expressed as a percentage or a set amount Flexibility to switch products customers can miss four payments, after four missed payments they have the option to switch to interest roll-up or voluntary product Original advance interest rate if switching Interest rate at switching will be the rate applying to the interest roll up or voluntary product at the time of the original advance

12 Our Products Product Fixed rate MER/AER % CPI Collar MER % CPI rate payable MER/AER % CPI CAP MER % Lump Sum Lite 5.18/5.30% 2.50% 3.50/3.56% 7.50% Lump Sum Standard 5.37/5.50% 2.70% 3.70/3.76% 7.70% Voluntary Payment Lite 5.65/5.80% 2.99% 3.99/4.06% 7.99% Voluntary Payment Standard 5.84/6.00% 3.19% 4.19/4.27% 8.19% Interest Payment Lite 5.18/5.30% 2.50% 3.50/3.56% 7.50% Interest Payment Standard 5.37/5.50% 2.70% 3.70/3.76% 7.70%

13 Voluntary Payment - Summary These borrowers: Have concerns about the impact of the interest roll-up, and how this will erode the equity in their property Have family who are concerned about the impact of roll up on their inheritance Have residual mortgage debt they wish to continue to pay down in retirement Like the idea of paying something off the debt but don t want to commit to regular payments Are looking for flexibility in managing their finances in retirement. 13

14 Interest Payment - Summary These borrowers: See avoiding the impact of interest roll up as a top priority Are looking for the discipline of a regular monthly payment to pay some or all of the interest. These clients have been used to paying monthly payments on their mortgage in the past Want to continue borrowing into retirement and can't continue their current interest only borrowing with their mainstream lender. They may also not pass affordability assessment Are looking for an interest only loan for house purchase Are looking to help their child with a deposit for a house purchase where the child would like to help make contributions to the interest being charged on the loan. 14

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18 Comparing Interest Only with Roll-up Scenario One: Interest Roll-up 150,000 loan Interest rate 4.25% Term of 20 years Total Owed: 344,836 Scenario Two: Interest Payment 150,000 loan Interest rate 5.18% Term of 20 years Payments made for the first 10 years Total Owed: 248,555 Scenario Three: Interest Payment 150,000 loan Variable interest rate (currently 3.76%) Term of 20 years Payments made for the first 10 years Approximate Total Owed: 216,966