Whole of term discount lending into retirement remortgage

Who's the product for?

Affordability can be assessed using earned income up to retirement age. Once the client reaches retirement, affordability for the remainder of the term will be calculated using verifiable income from a pension or other sustainable source, such as investments or rental income. Death stress calculations will be used should either borrower reach age 80 during the mortgage term. Once affordability is satisfied, we apply a 4.49 times income multiplier to determine the maximum level of borrowing. To verify if your clients meet affordability criteria, contact a member of the team directly.

Split Terms

Did you know that within our later life lending proposition, clients can choose to split their term to reflect their changing financial position following retirement? Above affordability requires still apply, but can also be assessed separately against their current earned income, and future pension provision enabling a proportion of the mortgage to be secured over an extended term. For example:

Mr & Mrs Client are 55 and 52 years of age and are moving to a new house and require a mortgage of £180,000 to support this new purchase. Their current salaries are sufficient to support the £180,000 borrowing, but rather than apply a term to Mr scheduled retirement age (70). They were able to demonstrate that their pension provision was sufficient to support borrowing in retirement of £100,000. This enabled an application to be agreed on a split extended term:
Part 1 £80,000 on a capital and repayment basic over 14 years
Part 2 £100,000 on an interest only basis for 29 years

For joint applications where both applicants are retired but cannot prove affordability in sole name applications will be considered where there is enough equity available to downsize to a two bedroom flat/house within 5 miles of the mortgage property. Your clients can use the sale of their home as their repayment strategy provided they have sufficient equity to downsize to a two bedroom flat/house within 5 miles of the mortgage property.
Up to the maximum product LTV can be released for capital raising purposes. Borrowers must provide a signed declaration stating that in the event of death it is the intention of the surviving borrower to downsize. The mortgage must be repaid following a life event, including:

• death of the sole borrower or the surviving borrower for joint mortgages;
• sole borrower or surviving borrower for joint mortgages entering long-term residential care; or
• sale of the property.

These products are available for all residential properties (providing they meet our property criteria), as well as purpose-built retirement properties. For retirement properties, the following criteria restrictions apply:

• Maximum 60% LTV
• £200,000 minimum property value;
• Section 106 restrictions are accepted where the developer has specific right to first refusal of buy back as long as no onerous terms or reduced value apply;
• New build apartments are accepted; and
• Properties within a large scale retirement village will be considered subject to valuer feedback

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Product related fees

There is an arrangement fee of £499. This fee can be paid up front by deducting the fee from the amount borrowed. Alternatively you can add the fee to the mortgage amount.

If you add the fee to your mortgage you will pay interest on the fee at the same rate as your mortgage.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Product incentives

Free standard valuation: We'll cover the cost of one standard mortgage valuation on a property valued up to £400,000. Your client can choose to have a RICS Homebuyers Report, however they'll have to cover the difference in cost.

Fees assisted legals: We'll cover the costs of any standard legal fees involved. Any non-standard costs will be payable by your client. You'll be advised of any non-standard costs should any apply. If your client chooses to use our own conveyancers they'll only act for us and not for the customer during the remortgage transaction. If your client needs to add or remove a name on the mortgage they must appoint their own solicitors, and they'll receive £250 cashback towards their costs.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Mortgage amounts

The minimum mortgage amount of £50,000 and the maximum amount we will lend is £500,000.

There's a minimum property value of £75,000 which increases to £250,000 for properties located within the M25 corridor.

The maximum loan to value is 75% of the purchase price or valuation, whichever is lower.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Interest rate floor

The interest rate is floored and cannot fall below 2.30%.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Mortgage repayment terms

Your client can repay their mortgage over a minimum of 5 years, or a maximum of 35 years.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Early Repayment Charges

Up to 10% of the original mortgage amount can be overpaid for the first two years of the term without charge. If the mortgage is redeemed or switched to another product during the discount rate product term then an Early Repayment Charge will apply.

The Early Repayment Charge will be calculated at:

• 2% of the amount repaid during year 1; and
• 1% of the amount repaid during year 2.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.