Type: Impaired life equity release mortgage
Minimum-maximum age: 60-no maximum
Minimum loan: £25,000
Maximum loan: Dependent on health of applicant
Fixed rate: 7.65%
Conditions: No negative equity guarantee, free valuation
Arrangement fee: None
Redemption fee: Dependent on interest rates at time of redemption
Introducer’s fee: Standard terms – initial 1.5% of the original loan
Tel: 0845 108 7237
Enhanced annuities specialist Partnership has created an equity release mortgage for people with long-term health problems such as diabetes and cancer, or lifestyle issues such as smoking. As health impairment impacts on life expectancy, this enables Partnership to provide more cash to borrowers than standard products. The product is aimed at people over 60 and to qualify, properties must be valued at least £70,000.
Considering how this product could be useful to IFAs and their clients, Sesame research operations advisers Roxy Young says: “There is a no negative equity guarantee provided free of charge. This guarantee is a promise by Partnership that neither the client’s estate or family will ever have to pay back more than the value of the home, even if the accumulated debt is more.”
She highlights the availability of full and part redemption, for which early repayment charges will apply. “If the policyholder dies or requires care outside of the home then Partnership will allow six months to sell the property and repay the loan. Beyond that time, cases will be reviewed on an individual basis.
“Policyholders are also able to transfer the lifetime mortgage without penalty when moving home. All fees incurred by this transfer will be picked up by the policyholder. If a policy needs to be changed from a single life to a joint life, then Partnership must be notified and certain conditions will apply, which are contained in the product literature. If the policy is a joint life policy and one of the lives die then the policy will be transferred into the surviving policyholder’s name.”
Young adds that Partnership Assurance has an AKG financial strength rating of B and that the product has a target market of retired homeowners with lifestyle or health issues, which allows them to access to enhanced benefits. “Protected inheritance is an extra feature. This is where less than maximum loan taken a proportion of the property is protected from the loan as an inheritance, and this is at no additional fee.” She notes that Partnership offers enhanced terms – in other words an increased loan-to-valuation – available for clients with health/lifestyle issues without increasing borrowing costs.
“Added to this, Partnership offer a fee-free approach, resulting in no application, valuation or completion fees,” she says.
Turning to the less attractive aspects of the product, Young says: “There is nothing to dislike about the product. However, the product does not offer a lump sum drawdown facility.
“A lifetime mortgage with a drawdown option removes the need to take the maximum lump sum required at outset, and provides the facility to draw down smaller lump sums over time.” She adds that the product is restricted to locations in England and Wales.
Discussing the potential competition, Young says: “There are plenty of providers in this area such as Aviva Equity Release, Hodge Lifetime, Just Retirement, LV = and Stonehaven. However, from the information we have received from these providers, Partnership is the only provider who have specifically stated that they cater for clients with health/lifestyle issues.”
Young points out that the product can be arranged for either one or two people who own and live permanently in their own home. “The property must be worth at least £70,000 and in good condition. Clients are responsible for paying their own legal fees. Additional borrowing is available, but there is a valuation fee of £150 attached to this option,” she says.
Suitability to market: Good
Competitiveness of fixed rate: Good