In light of the coronavirus outbreak, we are offering our Retirement Mortgage products up to 60% LTV with a remote valuation. We will continue to monitor the situation and review this on an ongoing basis.
The Hodge Retirement Mortgage is a hybrid mortgage, designed specifically for borrowers aged between 50 and 88. Here’s what you need to know:
- It’s an interest only lifetime mortgage
- It’s available on a 2 or 5 year fixed rate reverting to SVR
- Choose either 2 or 5 years’ fixed ERCs
- The mortgage includes the option to convert to roll up at age 80
- It offers loans from £20,000 to £750,000
- Allows your client to make additional payments of up to 10% a year penalty free from day 1.
This type of retirement mortgage can be used for an initial purchase or to remortgage an existing property. Additionally, 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, buying a holiday home, gifting to family or simply supporting pension or employment income, providing your client with an enhanced lifestyle.
To recommend our 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 does not guarantee lifetime tenure as it relies on repayments. Providing payments are maintained, it offers a no negative equity guarantee. While 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.
|Hodge 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)||4.20% 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 5 years, the client is entitled to make over payments 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 5 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 client. 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 Promise||If you sell your property and repay your loan in full, you won’t pay an Early Repayment Charge.|
|Early repayment charge||2 year fix (of capital repaid):|
Year 1: 3%
Year 2: 3%
Year 3 onwards – no early repayment charge is payable
5 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|
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 our retirement mortgage. The sources of retirement income we take into account include:
- Pension income or future entitlements
- Investment income
- Rental Income.
In order to be eligible for the retirement mortgage, your client needs to demonstrate they can afford the loan and will be able to repay it at the end of the term. The property must also form suitable security for the loan.
The property must form a suitable security for the retirement mortgage. We accept a range of property types.
Types of eligible property:
- Houses (freehold or leasehold)
- Bungalows (freehold or leasehold)
- Flats (leasehold)
- Maisonettes (leasehold).
There must be a minimum of 90 years unexpired term on the property’s lease.
If the property is a flat, it must be in a private block of 7 storeys or fewer.
The property must be of standard traditional construction:
- Walls – brick, stone or block
- Roof – concrete, slate or stone tiles.
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.
Documents & Forms
- Retirement Mortgage At A Glance
- Retirement Mortgage Guide
- Retirement Mortgage & Equity Release Property Eligibility Factsheet
- Retirement Mortgage Criteria And Affordability Guide
- Submission Packaging Guidelines
- Underwriting Guide
- Tariff of Mortgage Charges
- Loan To Value Table
- Retirement Mortgage Terms & Conditions