FSEGlasgow: Enhanced lifetime mortgages the answer to interest-only time bomb

Ryan Bembridge

March 21, 2017

Enhanced lifetime mortgages can provide a solution to some interest-only borrowers who would otherwise be rejected, Key Retirement technical director Dean Mirfin told brokers at the Financial Services Expo in Glasgow today.

Enhanced lifetime mortgages, where lending is based on health and lifestyle, can allow for some borrowers to get a bigger loan.

Mirfin said: “We have seen a noticeable increase in the number of enhanced lifetime mortgages being written, especially in terms of paying off interest-only mortgages.

“With these products higher LTVs are available which can make all the difference between the client getting the mortgage or not.”

“Advisers should explain to clients why being honest about their health is not a bad thing as it could get them access to the enhanced terms.”

The number of 60-64 and 65-69 year olds taking out lifetime mortgages have grown in recent years predominantly to pay off the capital left after their interest-only mortgage had finished, Mirfin said.

He added: “10,000 borrowers each year, over the next three years, are coming to the end of their interest-only terms with shortfalls.

“5,000 of those will have no repayment vehicle at all. Once you start to get to grips with equity release, you will start to see more customers like them.”

He also pointed out that there is a growing remortgage market in the lifetime sector.

He said: “The remortgage market is pretty vibrant,

“For example, the old Northern Rock book is now completely ERC-free and they should be ready to remortgage.”

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