Long-term care and retirement annuity specialist PAFS is planning to set up an impaired-life equityrelease product with interest rates and loan to values which vary to reflect the client's mortality risk.
PAFS says the product will benefit clients who face a retirement which is likely to be shortened by ill health and who want to release the value in their homes.
The firm says the product – to be launched in September – will benefit clients taking early retirement through ill health as well as those facing increased care costs because their condition is deteriorating.
PAFS plans to make more competitive interest rates available to impairedlife clients but it expects the biggest advantage to be the size of loan to value it can offer.
It says that conventional equity-release providers would offer 20 to 30 per cent of the property value but, for some impaired-life clients, around 40 to 60 per cent LTV could be available.
General manager Mike Douglas says: “The problem at the moment is that equity-release lenders assume that people have at least 20 years of retirement left when, for many people, this clearly is not the case.
“We plan to offer a product that the IFA will be happy to recommend because it is good value.”