Two-thirds of interest-paying equity release borrowers are under 70 – More2life
Neary two-thirds of equity release borrowers, who commit to paying some or all of the interest on their loans to avoid it accumulating, were under 70.
Data from More2life, which said it writes around a third of UK lifetime mortgages, revealed under-70s made up 63.6% of its Interest Reward customers in the first nine months of the year.
Interest Reward products give customers the opportunity to earn interest rate reductions by making qualifying repayments, thus cutting the long-term cost of their borrowing.
Those aged 60-64 represented the largest age group among Interest Reward customers, accounting for 25.9% of borrowers.
The lender said it suggested younger equity release borrowers were most likely to choose to pay some of the interest on their loan to protect the equity in their property.
Dave Harris, CEO of More2life, said: “The fact that Interest Reward products are attracting a significantly younger customer base suggests many borrowers want to stay flexible while also taking practical steps to manage the long-term cost of borrowing.”
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More2life also said it believed this represented a wider market shift, suggesting advisers were approaching customers with a broader view of solutions available to borrowers looking for wealth solutions.
Harris added: “The later life lending conversation is evolving, and while lifetime mortgages were historically often viewed as a solution that customers considered relatively late in retirement, we’re seeing homeowners engage with advisers much earlier and take a far more proactive approach to planning.”
He also pointed to the increasing retirement age, an issue frequently raised within the later life sector.
“Someone who takes out a lifetime mortgage at 60 could have it for 25 or 30 years, so the way interest builds up makes a big difference to what’s left at the end. We’re also living in a time where many people in their late 50s and 60s are still working and can put some of that income towards the interest,” said Harris.
