New lifetime mortgages for retired borrowers?

Interesting to see that the FCA is currently reviewing the borrowing needs of the retired generation with a view to introducing a new alternative to the much criticised “equity release” mortgage.

The FCA’s current consultation is looking at a much cheaper interest only loan which would be repaid from the capital when the mortgaged property is sold (presumably after death in many cases).

This option would be a welcome relief to many of my clients who often have quite valuable homes but very little money to live on in retirement; they don’t want to move but equally don’t want to get into the realms of equity release and “waste” their children’s inheritance.

Well done FCA for looking at this topic… let’s hope that some sensible proposals result…. and more flexible lending for the older generation!

Also known as 'lifetime mortgages', most equity release deals involve compounding the interest over many years, which can hugely inflate the cost.

What the FCA envisages would be a cheaper alternative where pensioners who cannot afford to clear their capital debt can continue to pay only the interest, each month, on an indefinite basis.