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Thursday, 08 June 2017
OneFamily Lifetime Mortgages OneFamily Lifetime Mortgages
Thursday, 08 June 2017
OneFamily Lifetime Mortgages
Agenda
• Introduction to OneFamily
• Customer needs
• Our products
Thursday, 08 June 2017
About OneFamily
Over 2 million members benefit from our simple, good value life insurance, health and savings products
Award winning 50+ Insurance
£7billionof assets under management
Family Investment + Engage
Thursday, 08 June 2017
What does the customer need?
Residential MarketEquity Release Market
Lifetime mortgage = Lifetime term?
Option to repay interest and/or capital
Short term product Long term product
Thursday, 08 June 2017
Customer needs
Re-financing or raising new capital?
Afford payments
Intention to repay – e.g. downsizing
Product flexibility
selection and risk
Type of advice
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Our products
6
Interest Payment Lifetime Mortgage
Customer has the choice of paying all, or some of the interest each month, for a period of their choice
Voluntary Payment Lifetime Mortgage
As per roll-up, however the customer has the option to make voluntary payments each year, up to 10% of the initial loan
Interest Roll-up Lifetime Mortgage
No interest payments are required and instead the interest is compounded and added to the loan each month
Choice of variable or fixed interest rates
Fixed Early Repayment Charges
Thursday, 08 June 2017
Available for purchase and re-mortgage
Early Repayment Protection
In the form of ‘Downsizing
Protection’. No ERC payable for customers who wish to fully redeem
their loan when they sell up after five years
Minimum loan size£10K – Maximum
£750K
Minimum property value
£70K – Maximum £Unlimited – refer
above £2M
Minimum age 55Maximum age 100
Further advances minimum of £4000
Members of the Equity Release
Council
Common features
Ex-LA Flats above £250K
(Above 66% occupancy)
Accept satisfied CCJs and Defaults
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Available on ONS website
CPI change calculated from October-
September
ERCs fixed for 10 years
6% fixed for 5 years, 3% for
remaining 5 years
Option of fixed or variable interest
rates
Variable rate calculated as
2.50% - 3.19% + CPI
Variable rate cap 7.50% - 8.19%
Rate change annually in December
ERCs and Pricing
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Single
Lite LTV
Product LTVs
LTV age 55
46
LTV age 85
16
Joint 15 45%
Single
Standard LTV
LTV age 55
50%
LTV age 85
21%
Joint 20% 50%
Single
Lite LTV LTV age 55
46%
LTV age 85
16%
Joint 15%
Thursday, 08 June 2017
Voluntary Payment Lifetime Mortgage
Unlimited paymentsthroughout the year by Standing Order, Debit Card, cheque or bank transfer
Voluntary payment of up to 10% of the original balance each year
Payments commence as soon as the mortgage has completed
Additional borrowing paymentscan be made as soon as the loan has completed
Minimum payment of £25
The annual allowance is renewed on the anniversary of the mortgage and cannot be carried forward
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Interest Payment Lifetime Mortgage
Interest payment termfrom year one up to the lifetime of the loan
Payments of up to 100%of monthly interest – minimum £25
Selected paymentmay be expressed as a percentage or a set amount
Flexibility to switch products customers can miss
four payments, after four missed payments they have the option to switch to interest roll-up or voluntary product
Original advance interest rate if switching Interest rate at switching will be the rate applying to the interest roll up or voluntary product at the time of the original advance
Thursday, 08 June 2017
Our Products
Product Fixed rate MER/AER % CPICollar MER %
CPI rate payable MER/AER %
CPI CAP MER %
Lump Sum Lite 5.18/5.30% 2.50% 3.50/3.56% 7.50%
Lump Sum Standard 5.37/5.50% 2.70% 3.70/3.76% 7.70%
Voluntary Payment Lite 5.65/5.80% 2.99% 3.99/4.06% 7.99%
Voluntary Payment Standard 5.84/6.00% 3.19% 4.19/4.27% 8.19%
Interest Payment Lite 5.18/5.30% 2.50% 3.50/3.56% 7.50%
Interest Payment Standard 5.37/5.50% 2.70% 3.70/3.76% 7.70%
Thursday, 08 June 2017
Voluntary Payment - Summary
13
These borrowers:
• Have concerns about the impact of the interest roll-up, and how this will erode the equity in their property
• Have family who are concerned about the impact of roll up on their inheritance
• Have residual mortgage debt they wish to continue to pay down in retirement
• Like the idea of paying something off the debt but don’t want to commit to regular payments
• Are looking for flexibility in managing their finances in retirement.
Thursday, 08 June 2017
Interest Payment - Summary
14
These borrowers:
• See avoiding the impact of interest roll up as a top priority
• Are looking for the discipline of a regular monthly payment to pay some or all of the interest. These clients have been used to paying monthly payments on their mortgage in the past
• Want to continue borrowing into retirement and can't continue their current interest only borrowing with their mainstream lender. They may also not pass affordability assessment
• Are looking for an interest only loan for house purchase
• Are looking to help their child with a deposit for a house purchase where the child would like to help make contributions to the interest being charged on the loan.
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Comparing Interest Only with Roll-up
Scenario One: Interest Roll-up• £150,000 loan • Interest rate 4.25%• Term of 20 years
Total Owed: £344,836
Scenario Two: Interest Payment • £150,000 loan• Interest rate 5.18% • Term of 20 years• Payments made for the first 10 years
Total Owed: £248,555
Scenario Three: Interest Payment • £150,000 loan• Variable interest rate (currently 3.76%)• Term of 20 years• Payments made for the first 10 years
Approximate Total Owed: £216,966
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