What is it? A lifetime mortgage which allows your client to make a contribution of up to 15% of the initial loan amount each year, without facing an early repayment charge (ERC). Who is this product likely to appeal to? Clients who want the freedom to choose how much to pay off their lifetime mortgage balance, and want to choose when they do it. Clients who have concerns over the impact of interest roll-up eroding the equity in their property. Clients who want to pay back all of the interest and some of the capital each year. Clients who want to leave an inheritance to their loved ones. Clients who do not want to make regular monthly payments. Voluntary contributions Voluntary contribution amount Annual allowance What is the minimum contribution amount? What is the maximum contribution amount? How soon can they make their first contribution? How frequently can a contribution be made? How can a contribution be made? Penalty for not making a contribution Up to 15% of the initial loan amount each year, without an early repayment charge (ERC). If the completion fee is added to the loan balance (rather than paid at completion), it is included in the 15% allowance. The annual allowance is renewed on the anniversary of the date the mortgage completes. Any unused allowance does not roll over into the following year. The minimum payment amount is 50. The maximum payment amount is the full 15% allowance, as stated in your client s Offer Letter. The first payment can be made on the day following completion. Unlimited payments can be made each year. Payments can be made by debit card (via telephone only), cheque, bank transfer or standing order. We always enclose a Standing Order form with your client s Welcome Letter. Clients are not penalised if they do not use their annual payment allowance. Criteria Minimum loan amount 10,000. Maximum loan amount 750,000, nationwide. Loans between 750,000 and 1 million will be considered on a case by case basis. Minimum applicant age 55. Maximum applicant age 90 (if joint borrowers, the youngest borrower must be 90 or younger). Minimum property value 70,000. Maximum property value 6 million, nationwide. Properties above 6 million are reviewed on a case to case basis. Property location England, Scotland and Wales.
Product features Early repayment charge Downsizing Protection Early Repayment Waiver Inheritance Guarantee available? Ability to port the mortgage? Covered by Equity Release Council safeguards? Keeping your clients informed Fixed for the first 8 years after the completion of the initial loan, cash reserve facility withdrawal or additional borrowing. Not applicable thereafter. Please refer to our Guide to Fixed ERCs. If, after 5 years, the client wants to repay the loan because they are selling their home and moving to a different property they will not need to pay an Early Repayment Charge. The client will not need to pay an Early Repayment Charge if they decide to repay their Lifetime Mortgage within 3 years of the date that the first borrower dies or goes in to long term care. Yes, free of charge. Please refer to our Inheritance Guarantee guide. Yes. Yes, this range of products come with a No Negative Equity guarantee, simple and clear documentation, fixed interest rates, the right to move the loan to another property, and the right to remain in the property. They will receive a letter confirming receipt of any payments, which also includes how much of their annual allowance is still available to use. They will receive an Annual Statement detailing their account. Additional borrowing Is additional borrowing available? Yes, subject to lending criteria at the time of application. Which product can it be taken on? Your client must stay within their original product LTV range, and they cannot switch to a new product. For example, if they originally took, they can only apply for the maximum available within the Gold LTV range. If they completed on our old product range (eg Voluntary Select Lite), they cannot move to Gold. Can my client make voluntary Your client(s) will be entitled to pay up to 15% of each further advance contributions? amount each year, without an early repayment charge (ERC). Minimum amount? 4,000. Maximum amount? The maximum amount available within the product range. What fees are payable? Completion fee = 0. If my client has a cash reserve facility, can they still take additional borrowing? Your client may need to pay a valuation fee and/or a financial advice fee. Additional borrowing can only be taken when the cash reserve facility has been cleared.
Cash reserve facility Is a cash reserve facility available? Yes. If your client s choose to have this product feature, their monthly interest rate will increase by 0.2%. How is the reserve facility amount It is the amount available within the chosen product range, minus the initial calculated? advance. Can my client make voluntary Your client(s) will be entitled to pay up to 15% of each withdrawal amount contributions? each year, without an early repayment charge (ERC). Minimum amount? Minimum withdrawal amount is 2,000. Maximum amount? When can withdrawals be made? How long does each withdrawal take? What fees are payable? If your client makes a withdrawal, does it impact when they can make voluntary contributions? What interest rate will be charged? Does the amount in the cash reserve facility change? Is the cash reserve facility guaranteed? If the amount remaining in the cash reserve facility is less than 2,000, they can withdraw it but must do so in full. The full amount remaining in their cash reserve facility. Withdrawals can be made at any time, and as frequently as your client wants. All we ask is that only one request is in progress at a time. Up to 30 days. We do not charge a fee when your client makes a withdrawal from their cash reserve facility. No, it does not impact when a voluntary contribution can be made. The interest rate applied to withdrawals will be set at the prevailing interest rate at the time of the request. No, it is fixed at the outset. It does not increase with age, property value, or voluntary contributions. If you protect equity at the outset, reducing it will not increase the amount available in the cash reserve facility (but will increase the amount available as additional borrowing). The cash reserve facility may not be guaranteed in all circumstances, there are certain situations where it can be reduced or removed. Please see our Terms and Conditions for further details.
Impact of making voluntary contributions This illustrates the impact of making voluntary contributions. Case study: 73 year old male borrower, who has borrowed 50,000 (on a property valued at 250,000). He paid the completion fee at the point of completion, and is making annual 15% voluntary contributions. after 5 years after 10 years after 15 years Overall cost of the lifetime mortgage As Interest Roll Up 67,846 92,062 124,922 124,922 Paying 100% interest every year Paying 15% every year 50,000 50,000 50,000 97,210 25,319 10,000* 10,000* 79,880* *Minimum loan balance of 10,000 required, unless the lifetime mortgage is fully redeemed. 140,000.00 120,000.00 100,000.00 80,000.00 Paying 0% every year 60,000.00 40,000.00 20,000.00 At completion After 5 years After 10 years After 15 years Paying 100% interest every year Paying 10% every year
Interest Rates and LTVs Voluntary Select Platinum Monthly interest rate (MER) 5.55% 6.12% Annualised interest rate (AER) 5.69% 6.29% Age LTV % LTV % 55 19% 24% 56 20% 25% 57 21% 26% 58 22% 27% 59 23% 28% 60 24% 29% 61 25% 30% 62 26% 31% 63 27% 32.5% 64 28% 33.5% 65 29% 35% 66 30% 36% 67 31% 37.5% 68 32% 38.5% 69 33% 40% 70 34% 41% 71 35% 42.5% 72 36% 43.5% 73 37% 45% 74 38% 46% 75 39% 47% 76 40% 48% 77 41% 49% 78 42% 49% 79 43% 49% 80-90 44% 49% Please note: The LTVs may be adjusted in certain circumstances, such as sheltered accommodation or non-standard construction types. Please speak to our Underwriting team for further information. Retirement Advantage is a trading name of Stonehaven UK Ltd. Authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Registered number: 05487702. Registered office: 110 Cannon Street, London, EC4N 6EU. 30-021 01/18