Later Life Lending could provide a solution for your clients who are left with an interest only shortfall at the end of their term.
Over the next 30 years, 2.6 million interest only mortgages will be due for repayment, with an anticipated peak of £33bn worth of interest only mortgages due for maturity in 2032, and it is estimated that half will have a shortfall. What’s more, 70% of all interest only mortgages are held by customers over 45.
However, homeowners over the age of 55 in England alone have nearly £1.28 trillion of equity in their houses and more are realising the benefits of releasing that equity and a lifetime mortgage could provide your clients with an appropriate solution to meet their interest only shortfall.
Available to clients over the age of 55, a lifetime mortgage enables an individual to borrow against the equity in their home, without the need to make monthly repayments. Instead, interest is typically ‘rolled up’ and added to the balance, which is usually repaid from the sale of the clients’ home when they die or enter long term care.
The funds can be released as a lump sum or in smaller payments as a drawdown facility to be used as and when they’re required and there is a ‘no negative equity’ guarantee so a client or their estate’s beneficiaries will never be liable to pay anything over the value of their home. A borrower can also opt to include ‘inheritance protection’ with some plans that will guarantee an agreed percentage of their homes’ value to be passed down, irrelevant of how much interest is owed.
Some lifetime mortgages now include the option to make some payments towards a loan to reduce their overall cost of interest, with flexible options to pay interest for part of the term or pay a portion of the interest throughout the period of the loan.
At Brightstar, we have recently launched a partnership with Sentry Lifetime to provide brokers with a Later Life Lending service that gives you access to independent lifetime mortgage advice through a highly experienced team of FCA regulated professionals who are members of the Equity Release Council.
The partnership means that you can now offer a range of equity release solutions to your clients, even if you do not hold the relevant qualifications. The process is simple – just contact Brightstar with a client referral and earn a share of the proc fee upon completion. You will also have the peace of mind that Brightstar maintains a no cross-selling guarantee on all referrals.
If you have older clients who are approaching the end of the term on an interest only mortgage, give Brightstar a call to see whether we can provide a Later Life Lending solution that meets their needs.
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SECOND CHARGE MORTGAGES
SHORT TERM FINANCE
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