More2life has launched its first flexible Payment Term Lifetime Mortgage (PTLM).
These new-style products are designed to bridge the gap between mainstream mortgages, where all interest must be covered by the borrower each month and lifetime mortgages where the interest is rolled up and paid from the eventual sale of the home.
More2life’s Flexi PTLM is aimed at customers between the ages of 55 and 62 who can afford to cover some of the interest costs, allowing them to borrow at a higher LTV than they would otherwise be able to access via traditional lifetime mortgage.
Borrowers can choose between a selection of different payment levels to commit to depending on what they can afford and these each correspond to a different LTV.
The launch follows a recent change in the Financial Conduct Authority (FCA) handbook for products of this type.
Under the new Flexi PTLM plans, borrowers commit to set level of interest payments until they reach 66, after which interest is rolled up as it would be with a traditional lifetime mortgage.
On top of this, borrowers can choose to make extra voluntary payments if they wish to reduce the long-term cost of borrowing.
The product might also appeal to those who can already attain higher LTV mortgages, but wish to reduce the impact of interest being rolled up.
Borrowers can only apply for the product with the help of an adviser.
The Flexi PTLM is protected by a no negative equity guarantee in common with other equity release mortgages.
More2life managing director Ben Waugh says: “As the later life lending market grows, the needs of our clients have changed.
“We are committed to developing new products to support people who might otherwise be underserved by the industry.
“Our Flexi Payment Term Lifetime Mortgage offering partial interest serving is a new concept in later-life lending and is the initial step in our efforts to expand the range of later life products.
“Whilst the initial scope is limited, we expect to extend both age ranges and payment terms available during the course of 2024.”
