The Flexible Lifetime Mortgage offered by Legal & General Hoem Finance is a drawdown lifetime mortgage plan which can be used as a single or joint option. It has their lowest equity release interest rate of the range of lifetime mortgage plans available. Is can be set up to maintain a cash reserve facility, which allows homeowners to withdraw an initial release and then make subsequent withdrawals in the future if needed.
In order to qualify for this product, the homeowner must be at least 60 years old. It is available for both joint and single ownership and the home must be the main residence. The product is available in mainland Scotland, England, and Wales. The home must have a minimum property value of £100,000. (£150,000 for ex-council houses)
The minimum withdrawal with the Legal and General Flexible Lifetime Mortgage is £10,000. There is the potential for additional withdrawals with this product. These subsequent withdrawals must be at least £2,000 each time, but they can be taken at any time. There is no additional fee incurred for each of these subsequent withdrawals.
Cashback is available with the L&G Flexible Lifetime Mortgage but it will have an impact on the interest rate that is applied to the loan. At first, a cashback of 2% is available and receiving the cashback will add 0.2% to the standard rate of interest for this product.
This Legal and General equity release plan serves to provide higher loan-to-value than most other drawdown plans. It offers a maximum cash reserve facility for additional future withdrawals. The repayment of the loan is due at the time of the homeowner’s death or when the homeowner moves into a long term care facility.
There are early repayment fees that can be incurred if the loan is paid off before one of these two options occur which are linked to gilts. However, Legal and General Home Finance do allow for a 10% repayment of the original amount borrowed each year with no penalty. These are called Optional Partial Repayments. This therefore allows for balance management and thereby helps control the heir’s inheritance for the future.
The plan continues until the last survivor has died or gone into care. L&G do place a feature in their lifetime mortgage plan which ensures that on death of the first person on a joint life plan, the survivor has a 3 year window in which they can choose to sell the property with no penalty.
The drawdown scheme also provides for inheritance protection. If the homeowner does not access all of the reserve or only a portion of the allowable equity is released, the portion that is remaining is provided to the heirs at the time that the property is sold.
There are several features that make this product attractive to homeowners. It offers a refund of valuation fee along with the cash back option. This product is ideal for the homeowner or couple who is looking to release a good amount of equity while also preserving some funds for future withdrawals, if needed and obtaining a low competitive equity release interest rate.