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Stonehaven adds interest option on lifetime loan

Equity-release provider Stonehaven has introduced Interest Select, a product that allows people to choose to pay an amount of monthly interest on their lifetime mortgage.

The provider says lifetime mortgages are becoming increasingly popular but some homeowners worry about the size of the loan increasing over time.

Interest on equity-release loans is usually rolled up but Interest Select aims to address accrual concerns by allowing customers to pay some or all of the interest each month.

This can reduce the size of the rolled-up loan considerably. For example, on a £40,000 loan, a monthly payment of £30 over 25 years could red-uce the eventual amount owed by £21,000.

Interest Select is available at interest rates starting from 6.08 per cent.

Chief executive Jayne Almond says: “Interest Select reflects the needs of our customers who are seeking to take a more hands-on approach to managing the interest on their lifetime mortgages.

“It provides a level of flexibility that current economic conditions demand and it is the only product on the market that allows mortgagees to actively control the amount of interest accrued to their final lump sum. Innovation and adaptability are vital if the equity release market is to truly help consumers during what will be a difficult financial year.”

Retirement Plus director Duncan Young says: “I think this is a very positive move. People do worry about the size of the full accrual, so it is fantastic that those who have some form of income can start to pay it off. It is a nice product to have available because it is giving people flexibility which is always positive and the rates sound reasonable as well.”

Stonehaven is hosting roadshows in London, Manchester, Leeds, Bristol and Coventry over the next month to talk to advisers about the product.

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