More2life has added a personalised discount feature to its Flex lifetime mortgage deals that rewards borrowers who make a contribution to the repayment of their plan.
Equity release borrowers who wish to make repayments are offered a discount off the headline rate of the plan, which reduces their cost of borrowing over the loan term.
Headline rates start from 5.97% and Flex Interest Reward discounts range from 0.05% to 0.75% at the start of launch.
What affects the Flex Interest Reward discount?
The level of discount offered is affected by the amount the borrower wants to repay and the term they wish to make the payments over. Those making the highest repayments for the longest periods are rewarded with the biggest discounts.
While advisers are expected to assess affordability for the product, it’s not based on the client’s credit score and the home won’t be repossessed if they stop making payments early.
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The personalised payment schedule, based on how much they want to pay and for how long, is in place for the life of the loan as long as all payments are made.
Borrowers can choose to pay more than 100% of the plan’s monthly interest and typically would receive a bigger interest rate discount for doing so.
In addition to the agreed monthly payments, lifetime plan holders can choose to make overpayments to help further reduce the cost of the borrowing; monthly payments and overpayments combined are allowed up to 10% of the initial loan amount each year during the early repayment charge (ERC) period.
What happens if borrowers fall behind on their Flexi lifetime mortgage payments?
If the account goes no more than three months into arrears during the contractual payment term, the client can retain the full interest discount if they make up the payment shortfall within three months.
If the borrower loses their discount due to missed payments, they won’t lose the full discount if they’ve already paid over 25% of their pre-agreed amount. Instead, payments made, including voluntary overpayments, will be considered so only a portion of the discount may be removed.
Dave Harris, chief executive of More2life, said: “We continue to look at the ways and means by which we can offer bespoke, personalised solutions to lifetime mortgage customers, not least so they have full control over the payments they make and certainty on the discounts they receive, allowing them to manage their finances much more effectively.
“Flexi Interest Reward does all this and then some, allowing the adviser to assess affordability and – in a first for this sector – allows them to secure personalised pricing at that moment in time, in order to ensure we can provide as competitive a rate as possible.”
