What are the main features?
|Mortgage Type||Indexed Lifetime Mortgage|
|Product benefit||To provide a tax free cash lump sum|
|Current interest rate (AER)||Standard: 5.57%
|Interest rate type||Variable rate which tracks movements in the Consumer Prices Index (CPI)|
|Interest rate guarantee||The variable rate will never exceed 8% (AER) or be below 3% (AER)|
|Overall cost for comparison||Standard: 5.74%
|The actual rate available will depend on your client’s circumstances. Ask for a personalised illustration.|
|Additional features||All lifetime mortgages offered by Hodge Lifetime include the Flexible Repayment Option where up to 10% of initial amount borrowed and can be repaid each year with no early repayment charge.|
|Cash Withdrawal Option||No|
|Minimum age (youngest applicant)||55|
|Maximum age (youngest applicant)||85|
|Minimum property value||£100,000|
|Maximum property value||£2 million|
|We may accept properties of more than £2 million on referral|
|Standard Loan to Value (on youngest age available on lifetime and indexed)||15% to 45%|
|Plus Loan to Value (on youngest age available on lifetime and indexed)||19% to 49%|
|Max Loan to Value (on youngest age available on lifetime and indexed)||21% to 50%|
|Early Repayment Charge||Years 1 to 5: 5%
Year 6: 4%
Year 7: 3%
Year 8: 2%
Year 9: 1%
|Locations available||England and Wales|
For further information on the Lifetime range, please visit the Resources section of the site.
Is the property eligible for equity release?
Summary of acceptable property types
|Type of property||
There must be a minimum of 90 years unexpired term on your property’s lease.
If the property is a flat, it must be in a private block of 7 stories or fewer.
|Construction method||The property must be of standard traditional construction:
|Past events||The property must not have recently been affected by flooding, subsidence or other structural issues.|
This table is only a summary. Please refer to our detailed property eligibility factsheets as follows:
- Version A (Fixed Early Repayment Charge) : For the Lifetime Mortgage and Indexed Lifetime Mortgage Products
- Version B:(Variable Early Repayment Charge) : For all other products offered by Hodge Lifetime
If you have any questions around the client’s property eligiblity please contact us and we will be happy to help.
The Consumer Price Index
Understanding more about the Indexed Lifetime Mortgage
This section applies to the Indexed Lifetime Mortgage, Indexed Lifetime Mortgage Plus and Indexed Lifetime Mortgage Max products only. The interest rate on these products is variable, as opposed to the majority of lifetime mortgages where the interest rate is fixed for the duration of the loan.
What is the Indexed Lifetime Mortgage?
The interest rate applying to the loan will be variable, and will be set each year on the 1st of April based on the percentage change in the Consumer Prices Index for the preceding annual period from September to September.
Indexed Lifetime Mortgages also include an interest rate guarantee which ensures that the variable rate will never go above a certain capped level, or fall below a certain floor level. These values are shown on our product summary page.
What is CPI?
Changes to the Consumer Prices Index (“CPI”) is the main measure of inflation in the UK. It is calculated and published monthly by the Office for National Statistics, and determined through a detailed survey of the prices of a large range of consumer goods and services.
What is the role of CPI in the UK economy?
The main objective of UK monetary policy is to deliver price stability, in other words inflation that isn’t too high or too low. Therefore, since 2003, the Government has set a target for CPI inflation of 2% per annum.
The Bank of England’s Monetary Policy Committee is tasked with managing the UK economy in order to keep the actual level of CPI inflation close to the Government target. If CPI inflation is higher or lower than the 2% target by more than 1 percentage point, the Governor of the Bank of England must write an open letter to the Chancellor explaining the reasons why inflation has increased or fallen to such an extent and what the Bank of England proposes to do to ensure inflation comes back to the target.
Why does Hodge Lifetime offer a lifetime mortgage linked to CPI?
We believe that choice is important. Depending on your clients specific needs and attitude to risk, a variable rate loan may be better suited to their circumstances.
Why is the interest rate linked to CPI?
CPI-linked funding sources usually have a cap and floor in place, and the benefits of the cap and floor can therefore also be included in the Indexed Lifetime Mortgage. This means the loan complies with the Equity Release Council’s SHIP Standards.
How do I find out more?
You can find out more about CPI, and its current level, by visiting the Office for National Statistics website: https://www.ons.gov.uk/economy/inflationandpriceindices
Indexed Lifetime Mortgage
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