onefamily lifetime mortgages€¦ · family investment + engage. thursday, 08 june 2017 what does...

Thursday, 08 June 2017

OneFamily Lifetime Mortgages OneFamily Lifetime Mortgages


OneFamily Lifetime Mortgages

Agenda

• Introduction to OneFamily

• Customer needs

• Our products


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


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


Customer needs

Re-financing or raising new capital?

Afford payments

Intention to repay – e.g. downsizing

Product flexibility

selection and risk

Type of advice


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


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


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


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%


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


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


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%


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.


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.


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

onefamily lifetime mortgages€¦ · family investment + engage. thursday, 08 june 2017 what does...

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