The Retirement Mortgage from Hodge is hybrid lifetime mortgage designed for borrowers age 55-85:
- Interest only lifetime mortgage
- 2 or 5 year fixed rate reverting to SVR
- 2 or 5 years’ ERCs
- Option to convert the mortgage to roll up at age 80
The Retirement Mortgage can be used for purchase or re-mortgage. A lump sum can be released at 52% LTV age 50-70, 47% LTV age 71-75 and 42% LTV age 76+. The sum can be used to pay off an existing mortgage, debt, gifting to family or simply supporting pension or employment income, providing an enhanced lifestyle.
To recommend Retirement Mortgage to your clients, you will need a relevant equity release qualification.
Keep in mind the Retirement Mortgage does not offer a fixed rate for life, and it doesn’t guarantee lifetime tenure as it relies on repayments. Providing payments are maintained it offers a no negative equity guarantee. Whilst outside the scope of the Equity Release Council’s SHIP Standards, it does offer the SHIP standard legal process. If you’re looking for the mortgage to be fully covered by SHIP standards, take a look at our other equity release products.
What is the Retirement Mortgage?
|Hodge Lifetime Retirement Mortgage|
|Mortgage type||Lifetime Mortgage|
|Product benefit||To provide a tax free cash lump sum|
|Affordability assessment||Loan interest is repaid on a monthly basis. The loan must be affordable based on the client’s current or projected pension income|
|Current monthly interest rate||4.05% fixed for 2 years, reverting to SVR thereafter
4.45% fixed for 5 years, reverting to SVR thereafter
|Current standard variable rate (SVR)||4.70% variable|
|Overall cost for comparison||5.00% APR for 2 year fix
5.00% APR for 5 year fix
The actual rate available will depend on the client’s circumstances
|Additional features||Interest roll up option – when the youngest borrower reaches age 80, or after the fifth anniversary of taking out the loan (if later), the client can choose to stop paying the interest on the mortgage and add it to the loan instead
Flexible Repayment Option – during the first five years, the client is entitled to make overpayments of up to 10% of the initial loan amount each year without incurring any early repayment charges. If the client pays more than 10%, early repayment charges apply on the whole amount repaid in that year. Any used capacity cannot be carried over to future years. No early repayment charges apply after five years
|No negative equity guarantee (NNEG)||Provided that the client keeps making interest payments when they are due, if the sale proceeds of the home are not sufficient to repay the amount we lent, this will be covered by the No Negative Equity Guarantee. No further sum will be payable by the cliet. If exercising the Interest Roll-up Option, the interest added to the loan each month will also be covered by this guarantee|
|Minimum age (youngest applicant)||50|
|Maximum age (youngest applicant)||88|
|Minimum property value||£100,000|
|Maximum property value||£1 million (outside London)
£2 million (London and designated high value areas)
|Maximum loan to value (LTV)||Age 50 to 70: 52%
Age 71 to 75: 47%
Over 76: 42%
The actual loan amount will be determined based on an affordability assessment
|Early repayment charge||2 year fix (of capital repaid):
Year 1: 3%
Year 2: 3%
Year 3 onwards – no early repayment charge is payable5 year fix (of capital repaid):
Year 1: 5%
Year 2: 4%
Year 3: 3%
Year 4: 2%
Year 5: 1%
Year 6 onwards – no early repayment charge is payable
|Locations available||England, Wales and mainland Scotland|
In order to be eligible for the Retirement Mortgage, your client needs to demonstrate that they can afford the loan and that they can repay it at the end of the term. The property must also form suitable security for the loan.
As part of the application, we will ask for proof of the level of income and outgoings claimed. We will use the information to assess your clients’ ability to afford the loan.
If the applicant is still working, we will need to know their employment income. If the loan term extends beyond the expected retirement date, the applicant must benefit from a reasonable level of income in retirement in order to be eligible for the Retirement Mortgage. The sources of retirement income we take into account include:
- Pension income or future entitlements
- Investment income
- Rental Income
The property must form a suitable security for the Retirement Mortgage. We accept a range of 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 is only a summary of the eligibility criteria. Please contact us and we’ll be happy to help with any questions.
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