Stonehaven cuts lifetime mortgage rates
Lifetime mortgage provider Stonehaven has cut the interest rate for new lifetime mortgages on the full range of its Interest Select products.
Interest Select products allow borrowers to pay off interest each month, thereby preserving their property’s capital, and were first introduced by Stonehaven in 2006.
The Interest Select options allow customers to service some, or all, of the mortgage enabling them to choose how much interest they want to pay and the period they want to pay for.
The difference between the four types of products are the maximum amount the customer can borrow and the interest rate that they will pay. Paying interest in full can save consumers thousands of pounds.
Georgina Smith (pictured), managing director of Stonehaven, said: “We are starting to see the leading edge of the pension crisis as older homeowners, who are faced with juggling the competing demands of a fixed income with an aspiration to enjoy life while they can. This generation of homeowners has benefited from the massive increase in house prices and are now seeking to cash in without having to downsize.
"This generation are looking for new flexible products and competitive interest rates mean that borrowers can provide a protected legacy for their children, but also release some cash for themselves. In essence, this increased flexibility means that people are waking up to the fact that they can enjoy today - and also provide for future generations.”
The most popular reason for borrowers taking out lifetime mortgages is to manage a mortgage shortfall, whether that’s due to an under-performing annuity or because their repayment vehicle is no longer in place.
The majority of Stonehaven’s customers choose to pay off at least a portion of the interest throughout the duration of the loan which saves money in the long-run and negates the impact of compound interest.
In a recent Stonehaven survey among advisers, 85 per cent of homeowners have little or no awareness that interest can be paid in part or in full for lifetime mortgages; and 94 per cent of advisers said that the majority of their clients who had the products explained to them fully are surprised by how flexible they can be.
Lifetime mortgages have become an increasingly innovative and flexible solution for older homeowners used to tackle many financial planning priorities, including: upsizing on new home purchases, Bank of Mum and Dad for first-time buyers, clearing existing interest-only mortgages, inheritance tax planning and retirement planning.