A new fixed rate lifetime mortgage has been launched with what is claimed to be the lowest ever available in the UK.

Lifetime mortgage provider Responsible Lending has launched the 2.82% fixed mortgage as competition rises in the equity release sector, along with increased sales of later life borrowing products.

What’s a lifetime mortgage?

With a lifetime mortgage the borrower doesn’t have to make monthly repayments.

Instead the interest charged rolls up and is repaid on the sale of the property, when the borrower dies or moves into long-term care.

There are now flexible options available allowing borrowers to make repayments if they can afford them, which can reduce the overall debt. And ‘no-negative-equity guarantees’ ensure that the total debt will never be more than the value of the property.

Lifetime mortgages are just one type of equity release product and it’s important that potential borrowers seek independent financial and legal advice about this type of scheme.

What’s the deal?

Responsible Lending’s new rate is available both with and without drawdown. The 2.82% APR rate is available on a sliding scale of loan-to-value ratio dependent on age.

For example, a customer aged 70 could access the rate with an LTV of up to 24% (for joint applications the LTV is up to 23%). There is no upfront fee.

The minimum loan amount is £10,000 and the product has fixed and early repayment charges (ERC). Customers can repay up to 10% of their loan each year without incurring an ERC.

Keith Haggart, managing director of the lender, said: “Lifetime mortgages have become hugely popular, and increased interest from investors has inevitably followed.

“Consumers now benefit from an enormous range of products and the most competitive rates the industry has ever seen, cementing the place of lifetime mortgages as a primary option for later life borrowing.”