Roll-up Lifetime Mortgage Lump Sum Plus Lifetime Mortgage

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1 For financial advisers only. Not approved for use with customers. Just Retirement Limited Lifetime Mortgages Roll-up Lifetime Mortgage Lump Sum Plus Lifetime Mortgage Technical guide for financial advisers Using the value of your client s home for a better retirement

2 Lifetime Mortgages Who are Just Retirement? Just Retirement Limited was created to provide an innovative alternative to traditional life and pension companies for customers at, or approaching, retirement. Since our launch in 2004 we are now proud to be a leading provider of lifetime mortgages. We are also committed to providing top quality service and support for clients and financial advisers. A full range of technical support material is available from your account manager or from our website Treating Customers Fairly Our commitment to Treating Customers Fairly is embodied in all aspects of our service, from the information we provide, through the application process, to the point where your clients payment is made, and throughout the entire time that they have their Lifetime Mortgage with us. The Financial Conduct Authority (FCA) is the conduct regulator for the financial services industry in the UK and Treating Customers Fairly (TCF) is a key expectation of firms they regulate. The FCA s guidance is there to ensure that you receive financial services and products which meet yours and your client s needs, from firms you can trust. Just Retirement is regulated by the FCA, and fully embraces TCF. 2

3 Technical guide for financial advisers Just Retirement s Lifetime Mortgages This guide gives you information on the Lifetime Mortgages offered by Just Retirement which may be suitable for your clients if they are aged 60 or over and own a property used as their main residence located within England, Wales, Scotland or Northern Ireland 1 worth 70,000 or more. Retirement is a time for making important choices and decisions about how best to maximise your client s income. They may already have a pension and savings, but are they enough for them to live on? If your clients have equity in a property they own, one way they can improve their finances in retirement is through equity release. At Just Retirement, our Lifetime Mortgages allow your clients to free up some of the cash built up in the value of their home, without having to move or cut back on their lifestyle. Indeed, equity release can be used for many different reasons: ease money worries they may have, gifts to family members, home improvements, taking that long awaited once in a lifetime trip, or just to maintain their lifestyle. In fact, your clients can use equity release for almost anything you and they can think of. Uses of equity release The chart below shows the value of borrowing for typical purposes from Just Retirement Solutions between September 2015 and February million Value 10 million 5 million 0 Ease money worries Home improvements Gift to family Car Holiday/Leisure Reason 1 Please note: The Just Retirement Lump Sum Plus Lifetime Mortgage is not available in Northern Ireland. 2 Just Retirement Solutions Limited is a sister company of Just Retirement Limited, and provides specialist equity release advice to customers. 3

4 Lifetime Mortgages The Roll-up Lifetime Mortgage The Roll-up Lifetime Mortgage provides clients with a flexible cash facility against which they can draw down cash advances over their lifetime. Eligibility To be eligible for the Roll-up Lifetime Mortgage clients must: Be aged 60 or over. (Age of youngest applicant if a joint application). Be the sole owners of the property, and must use the property as their main residence on a continual basis. For joint applications, clients must be either joint tenants or tenants in common. Own an acceptable property worth over 70,000 in the UK. Please see our guide to acceptable properties for further details. In certain circumstances, Just Retirement will accept applications on behalf of individuals by attorneys where there is a suitable Enduring or Lasting Power of Attorney registered with the Court of Protection. Initial cash advance The minimum initial cash advance is 10,000 and must be drawn on completion of the Lifetime Mortgage. The initial cash advance will be paid to the account of the client s legal adviser. If any part of the initial cash advance is required to pay off an outstanding mortgage or loan, this amount will be paid directly to the lender. All payments will be made in sterling. Cash facility Clients are allocated a cash facility at the start of their Lifetime Mortgage. The maximum cash facility will be the lower of: Three times the initial advance (subject to a maximum unused cash facility of 200,000). The maximum loan to value (LTV), which is based upon your age and property value. An overarching maximum of 600,000 in England and 250,000 in Scotland, Wales and Northern Ireland. The cash facility is guaranteed to be available for the life of the mortgage unless one of the following four exceptional circumstances occurs: The benchmark interest rate (based on the UK FTSE Gilts 15 Year Yield Index) has increased by more than 5% (e.g. from 4% to 9.1%) compared to the benchmark interest rate stated in the initial cash advance offer document. The total amount the client owes, plus the proposed additional advance, exceeds the estimated value of the property against which the mortgage is secured. Just Retirement (or in the event that the benefit of the Lifetime Mortgage has been transferred to another person, then that person) no longer offers Roll-up Lifetime Mortgages or other Lifetime Mortgages. An event of default has occurred, as set out in the loan documentation. If the property is owned on a tenants in common basis, the cash facility will not be available following the death of either client. Further information on these exceptional circumstances can be found in the Guide to the early repayment charge and availability of the cash facility. 4

5 Technical guide for financial advisers Clients can request drawdowns from the cash facility at any time, subject to a minimum amount of 2,000 and without the requirement to take further advice from an authorised financial adviser. Clients can also set up regular payments at any time, subject to a minimum amount of 2,000 per payment. These payments are made annually on the same date each year for an agreed period of years or until the cash facility is exhausted. Both drawdowns and regular payments can be requested by the client directly, or via an authorised financial adviser, in writing, by telephone, , or fax. There is no administration fee in either case. Additional borrowing Once the cash facility is exhausted, clients may choose to apply to us to increase it. Depending upon the clients circumstances, the value and condition of the property and our lending criteria at the time, we may agree to provide additional borrowing. Further cash advances are subject to a minimum amount of 5,000. Further cash advances will require clients to take advice from an authorised financial adviser. Further cash advances are not guaranteed. A property valuation may be required for further cash advances. If this is necessary, Just Retirement will make a charge for this which will not exceed the normal valuation fee applicable to new business at the time. There is no administration fee for further cash advances. Interest The interest rate for each cash advance is fixed for the duration of the Lifetime Mortgage. Interest is capitalised on the anniversary of each cash advance. The interest rate applied to the initial cash advance is shown in the Key Facts Illustration document issued with the offer and is guaranteed for six weeks from the date of issue. If the Lifetime Mortgage is not completed within six weeks of the offer, then the offer will expire. Any replacement offer that may be made will be in line with the terms available at the time, and consequently the interest rate may change. For drawdowns and further cash advances after inception, the interest rate will be set at the time it is requested, and clients will be informed in writing. This interest rate will also be guaranteed for six weeks from the date the confirmation is issued. If the drawdown or further cash advance is not drawn within six weeks of the confirmation, then the offer will expire. Any replacement offer that may be made will be in line with the terms available at the time, and consequently the interest rate may change. For regular payments, the interest rate is set six weeks before the date each payment is due to be made. This will be confirmed in writing and will be subject to the client s acceptance of the terms of payment. Fees, remuneration and charges For current fees, remuneration and charges, please ask for a copy of Roll-up Lifetime Mortgage at a glance guide. A tariff of charges is also available on request. 5

6 Lifetime Mortgages The Lump Sum Plus Lifetime Mortgage The Lump Sum Plus Lifetime Mortgage is designed to help clients who want access to the maximum possible share of the money locked up in the value of their home. With our expert underwriting capability we can take into account your client s medical and lifestyle conditions to determine the maximum value they are able to release from their home, giving them a cash lump sum that is based on their personal circumstances. Even if your clients don t qualify for enhanced loan to value terms, the standard LTV terms will provide clients access to a larger lump sum than would usually be available through our Roll-up Lifetime Mortgage. Eligibility To be eligible for the Lump Sum Plus Lifetime Mortgage clients must: Be aged 60 or over. (Age of youngest applicant if a joint application). Be the sole owners of the property, and must use the property as their main residence on a continual basis. For joint applications, clients must be either joint tenants or tenants in common. Own an acceptable property worth over 70,000 in England, Scotland and Wales. Please see our guide to acceptable properties for further details. In certain circumstances, Just Retirement will accept applications on behalf of individuals by attorneys where there is a suitable Enduring or Lasting Power of Attorney registered with the Court of Protection. The Lump Sum Plus Lifetime Mortgage is not available for properties located in Northern Ireland. Maximum lump sum available The Lump Sum Plus Lifetime Mortgage offers two LTV tiers: Standard LTV. Giving clients access to a larger lump sum than would usually be available through our Rollup Lifetime Mortgage. The maximum amount clients can borrow under the standard LTV terms is based on their age and the value of their property, subject to the overriding maximum set out below. Enhanced LTV. Using our expert underwriting capability to give clients the potential to borrow an even higher amount depending upon their medical and lifestyle conditions. The maximum amount they can borrow under the enhanced LTV terms is based on their age, property value, and personal circumstances, subject to the overriding maximum set out below. The maximum lump sum available is 600,000 for properties in England and 250,000 for Scotland and Wales. The minimum lump sum amount is 10,000. Further information about the current maximum standard LTV rates is available in our Lump Sum Plus Lifetime Mortgage at a glance guide. For guidance on whether your client may qualify for enhanced LTV terms and for an indicative personalised LTV please use the Lump Sum Plus Lifetime Mortgage Calculator on our adviser site at You will need to be a registered user of justadviser.com to access the calculator. Please note that the LTVs provided by the calculator are subject to change, and the final offer amount may differ. 6

7 Technical guide for financial advisers Payment of the lump sum cash advance The lump sum cash advance will be paid to the account of the client s legal adviser. However, if any part of the lump sum cash advance is required to pay off an outstanding mortgage or loan, this amount will be paid directly to the lender. Additional borrowing Clients will not be able to borrow any further money from Just Retirement for six months after the lump sum cash advance. If they require access to further money after this point, depending upon the client s circumstances, the value and condition of the property and our lending criteria at the time, we may agree to provide additional borrowing. Further cash advances are subject to a minimum amount of 5,000. Further cash advances will require clients to take advice from an authorised financial advisor. Further cash advances are not guaranteed. A property valuation may be required for further cash advances. If this is necessary, Just Retirement will make a charge for this which will not exceed the normal valuation fee applicable to new business at the time. There is no administration fee for further cash advances. Interest The interest rate is fixed for the duration of the Lifetime Mortgage. Interest is capitalised on the anniversary of the initial cash advance and any additional cash advance that is agreed. The interest rate applied to the lump sum cash advance, and any further cash advances, is shown in the Key Facts Illustration document issued with the offer and is guaranteed for six weeks from the date of issue. If the Lifetime Mortgage is not completed within six weeks of the offer, then the offer will expire. Any replacement offer that may be made will be in line with the terms available at the time, and consequently the interest rate may change. Please note that the interest rate on our Lump Sum Plus Lifetime Mortgage is usually higher than the interest rate charged under our Roll-up Lifetime Mortgage. Clients can usually borrow a higher amount with the Lump Sum Plus Lifetime Mortgage which could be invaluable if they need access to the money but remember that the amount owed will be higher than an equivalent Roll-up plan at the time it is repaid. Fees, remuneration and charges For current fees, remuneration and charges, please ask for a copy of Lump Sum Plus Lifetime Mortgage at a glance. A tariff of charges is also available on request. 7

8 Lifetime Mortgages How our Lifetime Mortgages work Repayment of the Lifetime Mortgage A lifetime mortgage is a lifetime commitment and is designed to be repaid when your client (or both clients, in the case of borrowing jointly) have died, or have permanently left the property due to the need for longterm care. If the Lifetime Mortgage is repaid at any time before that, for any other reason, clients may have to pay a substantial early repayment charge. The Lifetime Mortgage may also have to be repaid if the property is left vacant for a period of more than three months. Usually the mortgage will be repaid from the sale proceeds of the property, but it can be repaid from other funds if required. Repayment on death and long-term care The Lifetime Mortgage must be repaid within 12 months from when your client (or both clients in the case of borrowing jointly) dies, or permanently leaves the property because of a move into long-term care. For example, your client might move into a care home or live with and be cared for by relatives on a permanent basis due to medical necessity. In these instances, no early repayment charges will apply. If the mortgage is not repaid within 12 months Just Retirement may appoint a representative of our choosing to market and sell the property. Voluntary early repayment If your client decides to repay the Lifetime Mortgage early, there may be an early repayment charge to pay. This is to protect us against the financial consequences of their decision not to keep the mortgage for the full term. If the client decides to pay back the money before the full term, we have to reinvest that money to replace the proceeds that we would otherwise have expected to receive. This reinvestment process means Just Retirement incurs two distinct sets of costs. The first is the transaction cost incurred in reinvesting the money. The second cost is incurred if the interest rates available on investments have fallen since the time we originally loaned the money, which means the cost of the replacement investments will be higher. We measure the change in interest rates using the UK FTSE 15 Year Gilt Yield Index. An early repayment charge is charged to recoup these additional costs, which we would not have incurred if the mortgage had not been repaid early. Partial repayments are acceptable, subject to a minimum of 2,000 and the remaining loan balance being at least 10,000. If more than one cash advance has been taken, the amount repaid will be allocated in proportion to the amount owed on each cash advance. An early repayment charge will then be calculated for each cash advance taking into account the allocated repayment. If the client moves home and transfers their Lifetime Mortgage to a new property that meets our lending criteria at the time, and if we ask them to repay part of the amount owed there will be no early repayment charge provided they do not repay more than is required by us. Further details on the early repayment charge are included within the Guide to the early repayment charge and availability of the cash facility. 8

9 Technical guide for financial advisers No-negative-equity guarantee Provided your clients have complied with the terms and conditions, they will not have to pay more than the sale proceeds of the property even if it is less than the amount owed. There is no additional charge for this guarantee. Valuation report A valuation of the property is required before an offer is made. The valuation will be provided by a surveyor nominated by Just Retirement. A copy of the valuation will be supplied to the applicants with the offer letter. Insurance We require your client to have suitable buildings insurance cover for the duration of the Lifetime Mortgage. We will require confirmation of this, but will not levy any additional charge for checking the policy. Responsible lending Just Retirement does not consider that equity release is a suitable product for clients looking to raise capital for investment purposes and will not lend where this is the stated loan purpose. Moving home If your client wishes to move home it may be possible to transfer their Just Retirement Lifetime Mortgage to a new property if the new property is acceptable to us. The sale of the old property and purchase of the new property must take place simultaneously. If the new property has a higher value than the old property, it may be possible to apply for a further cash advance, subject to lending criteria applicable at the time. In some instances, for example if the client has traded down to a lower value property, we may reduce the cash facility and we may ask the client to repay part of the amount owed in line with lending criteria applicable at the time. If more than one cash advance has been taken, the amount repaid will be allocated in proportion to the amount owed on each cash advance. There will be no early repayment charge in these circumstances. If clients choose to repay more than is required, an early repayment charge will apply only to the extra amount repaid. The new property will be subject to valuation by a surveyor nominated by Just Retirement. The valuation fee will be the fee applicable to a new Just Retirement Lifetime Mortgage at the time. Your client is responsible for all the costs of moving. 9

10 Lifetime Mortgages Glossary Benchmark interest rate This is an interest rate (based on the UK FTSE 15 Year Gilt Yield Index) used by Just Retirement when calculating any early repayment charge and when assessing the availability of the cash facility. Additional advance An amount of money your clients take from the unused cash facility after taking the initial advance. Advance The initial advance or any additional advance. Amount owed The total amount of money that your clients must pay us in connection with their Lifetime Mortgage. Arrangement fee A fee your client must pay us for arranging their Lifetime Mortgage or when applying to make changes to their Lifetime Mortgage. Cash facility A loan facility of a fixed amount of money, specified in your client s offer, from which the initial advance, any additional advances, and any fees (except any arrangement fee for your initial advance) and costs added to the amount owed, are taken. The cash facility is paid in full as an initial cash advance to Lump Sum Plus clients on completion of their Lifetime Mortgage, therefore no unused facility will remain following the initial cash advance. Drawdown Ad hoc cash advances made to Roll-up Lifetime Mortgage clients from the cash facility they have been granted. Early repayment charge The amount of money your client may have to pay to us if all or part of the amount owed is repaid before repayment becomes due. Initial advance The amount of money shown in your client s initial advance offer that your clients take from their cash facility when their Lifetime Mortgage completes. Loan To Value (LTV) The maximum percentage of the property value that may be available, based on the age of the client. The LTV may also be based on the applicant s health and lifestyle under the Lump Sum Plus Lifetime Mortgage. Long-term care Due to your client s physical and/or mental medical condition they are no longer able to live in the property and they are receiving care away from the property on a permanent basis. Underwriting The process of assessing the client s health and lifestyle to determine the maximum loan to value they are able to release from their home. Unused cash facility The amount of money in the cash facility available for your clients to take any additional advances from, after your clients initial advance and all other advances, and fees (except any arrangement fee for your client s initial advance) and costs added to the amount owed, have been deducted from the original amount of your client s cash facility. 10

11 Technical guide for financial advisers Documentation To process an initial application we will require the following: Completed application form (including completed Money Laundering Declaration) Cheque for the valuation fee Evidence of age (birth certificate, passport, or photo driving licence for each applicant) We will then arrange a valuation of the property and issue an offer as appropriate, together with: Offer Key Facts Illustration Legal charge Loan agreement Guidance notes for legal advisers These details are correct at the time of printing and are subject to change from time to time. Full details of the terms applicable to individual cases are detailed in the loan agreement. For an individual quote, please contact your Just Retirement contact or us at support@justretirement.com. 11

12 For more information contact: Sales support telephone: (Lines are open Monday to Friday 8:30am to 5:30pm). Or log onto our website for further information: Just Retirement Limited. Registered Office: Vale House, Roebuck Close, Bancroft Road, Reigate, Surrey RH2 7RU. Registered in England Number Calls may be monitored and recorded, and call charges may apply. Please contact us if you would like this document in an alternative format /2016