LV= launches Flexible Lifetime mortgage

Retirement specialist LV= has launched today a new equity release product - Flexible Lifetime Mortgage - that allows homeowners to draw down funds from the equity in their home when they need to.

The LV= Flexible Lifetime Mortgage also offers homeowners a 15-year guarantee on the maximum loan amount that can be drawn down. This means that whatever happens to interest rates and property prices, homeowners have the peace of mind of knowing that throughout this period they can access the total amount agreed at the outset.

The new equity release product from LV= comes at a time when research commissioned by the investment, pensions and insurance group has indicated that 6.5m people over the age of 50 admit they are more concerned than ever about their income in retirement and level of savings. The LV= ‘State of Retirement' report also reveals that people approaching retirement are aware that there is a significant gap between the income they will need to maintain their standard of living in retirement, and what the will actually have. Those surveyed said that on average they would need £20,400 a year in retirement, but believed they would actually have an income of only £17,200 a year, which equates to a combined shortfall of more than £20.1bn.

Vanessa Owen, Head of Equity Release at LV= said: "In a time of such uncertainty, especially for those approaching their retirement, this is an exciting addition to the lifetime mortgage market and offers consumers a real choice with our flexible draw down offering. What was fundamentally important for us as a mutual organisation when designing this product was to ensure clarity and certainty. There are no complex fees, and the maximum loan agreed at outset is absolutely guaranteed to be available for the borrower to draw on for 15 years. Home owners over the age of 60 have the added benefit of being able to drawdown money from their property as and when they need it for what ever purpose they wish to use the equity, be it bridging an unexpected pensions shortfall, or making their retirement years more comfortable."

Homeowners between the ages of 60 and 95 can draw down a minimum amount of £10,000, making the LV= Flexible Lifetime Mortgage one of the most adaptable options on the market. Additional withdrawals of at least £2,000 can be made, up to the maximum loan agreed at outset.

The Flexible Lifetime Mortgage current rate of interest is fixed for the lifetime of the loan, and will be 6.95% at launch. The overall cost for comparison is 7.1% APR.

As an example, a couple aged 70 and 75 years respectively living in a property valued £325,000 would be able to take a starting loan of £15,000 for example to update their kitchen and top up their granddaughter's deposit for a flat. They could at the same time agree a maximum loan giving them access to a further £30,000 which they can draw on any time allowing them to enjoy a lifestyle which would not be possible if they had to rely on their pension.

An initial application fee of £695 applies which includes the cost of two further property re-valuations throughout the lifetime of the loan. The product also comes with a No Negative Equity Guarantee which means that both the customer and their beneficiaries will never have to pay back more than the value of their home on death or permanent entry into long term care.

Vanessa Owen concluded: "As an expert retirement solutions provider, and part of an insurance, investment and pensions group noted for its financial strength and fund management expertise, we have been able to enhance both the options and flexibility available to consumers facing or in retirement with this lifetime mortgage offering a drawdown facility. And with our heritage spanning some 160 years, we are certainly a provider that consumers will be able to turn to again and again during their retirement years."

This new flexible drawdown product from LV= compliments the existing Lifetime Mortgage offering of a lump sum option, which allows homeowners to borrow a percentage of their property value as a single lump sum.

The LV= flexible retirement solutions business, launched in January 2008 following the successful acquisition of the new business operations of Tomorrow (formerly GE Life), offers a range of capital and income retirement planning products, offering a brighter future for those who are planning, or already in, retirement.