You are here: Home - Mortgages - Remortgage - News -

Early repayment charge to be scrapped for new lifetime mortgage borrowers

Written by: Su Fowler
New lifetime mortgage borrowers will be able to make penalty-free partial repayments, the Equity Release Council (ERC) has confirmed.

From 28 March, new lifetime mortgage borrowers will no longer have penalties attached to partial repayments.

Some lenders already offer this flexibility, but the new guarantee will provide this as standard in all ERC-approved loans.

New customers could not only reduce their borrowing, but offset the interest, without signing up for further repayments.

However, it only applies to new applications after 28 March, and not to existing lifetime mortgage borrowers.

David Burrowes, chairman of the ERC, said: “Updating our standards to lock down the ability to make partial repayments on lifetime mortgages – an innovative feature that has become increasingly common in recent years – provides flexibility for consumers and ensures the sector continues to evolve to meet changing demographic needs.

“As recent years have reminded us, people’s circumstances can change and customers who find they can use earnings, savings or an inheritance to reduce their borrowing in later life will be able to do so without incurring early repayment charges.”

Stuart Wilson, corporate marketing director at More 2 Life, said the repayment announcement was great news for both customers and advisers.

“The ability to make penalty-free ad hoc repayments will allow people to better manage their borrowing and potentially help to open up the market to a new range of customers – especially when used in conjunction with interest repayments,” he said.

Since 1991, more than 592,000 new equity release plans were taken out by homeowners aged 55 and over to borrow £38.7bn against the value of their property.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week