PTLM helps borrowers access property wealth earlier – from 50, instead of 55 – and offers a tax-free cash lump sum in return for fixed monthly interest repayments up until retirement or age 75, whichever comes first
Legal & General Home Finance has announced its Payment Term Lifetime Mortgage (PTLM), a new type of lifetime mortgage which enhances the options available for borrowers over 50.
PTLM helps borrowers access property wealth earlier – from 50, instead of 55 – and offers a tax-free cash lump sum in return for fixed monthly interest repayments up until retirement or age 75, whichever comes first.
Borrowers can then opt to make voluntary repayments in retirement if they want, but unlike a retirement interest-only (RIO) mortgage, they are not required to make payments for life. Any unpaid interest is added to the total amount owed and is typically repaid from the sale of the home when the customer passes away or moves into long term care.
Borrowers will need to pass affordability checks, but Payment Term Lifetime Mortgage offers more flexibility by evaluating pre-retirement income, helping those with stable earnings to qualify, even if they expect income to drop in their retirement.
Homeowners can use Payment Term Lifetime Mortgage to replace a current mortgage, like a standard interest-only mortgage, assisting people on expiring interest-only deals who may have a shortfall in the repayment plan they have in place.
The Financial Conduct Authority reports nearly one million outstanding interest-only mortgages; borrowers are typically aged 56 with £140,000 left to pay. While one in five interest-only borrowers intend to sell their property to repay the loan, many want to seek alternatives. Over half of outstanding interest-only mortgages are between 25% and 55% loan-to-value, these are the borrowers PTLM is most likely able to support, with homeowners able to borrow up to 55.3% loan-to-value – substantially higher than LTVs in Legal & General’s current later life mortgage range.
This new wave of home loans is also providing more options to homeowners looking to access property wealth earlier – often for home improvements or for separating couples where an individual wants to remain in the home.
There will be a dedicated team set up under the ‘PTLM Concierge’ to help advisers use the product and underwrite cases.
Craig Brown, Chief Executive Officer of Legal & General Home Finance, said: This launch signals our commitment to lead the way and offer more choice for homeowners who are sitting on equity in their homes but cannot access this because of their age.
Brown added: There is a sizeable group of homeowners who fall between traditional lifetime mortgages and retirement interest-only solutions. PTLM bridges this gap, offering a great solution to individuals over 50 with sizeable home equity who want access to this earlier via a mortgage that is paid for from their current income. This not only gives younger borrowers more options to live the life they want, but it is also an answer for interest-only mortgage holders seeking a repayment plan to stay in their homes.