All should be available by the end of this month.
Growth in lifetime mortgage lending has slowed this year, and one of the reasons may be because of heightened sensitivity about this market in the light of the special new rules that will apply to lifetime mortgages under the new FSA regime from 31 October. The CML initiatives are designed to help give confidence to lenders and intermediaries, and to strengthen the integrity of the information given to borrowers to comply with the new rules.
The three aspects are -
· A set of good practice notes for the selling of lifetime mortgages. These notes are designed for lenders and for mortgage intermediaries. They are not intended to replace the FSA rules, but aim to help ensure that no requirements are omitted from the sales process.
· Information on the potential impact on tax and benefits of taking out an equity release loan. The FSA requires those selling lifetime mortgages to consider whether someone will be worse off in terms of tax and benefits if they take out an equity release loan. Tax and benefits for older people are complex, so this freely-available web-guide should help lenders and intermediaries to meet this part of the FSA requirements.
· Software to assess tax and benefits impacts on individual households. A generic leaflet will not always be able to provide answers about how equity release would impact on the individual. The CML is therefore working with Ferret Information Systems Ltd (an experienced provider of benefits software to the public and voluntary sectors) to develop software for lenders and intermediaries to use to assess the impact of different schemes on an individual's tax and benefits.
Commenting on the initiatives Jackie Bennett, CML Senior Policy Adviser, said:
"The new rules for lifetime mortgages go beyond the FSA's requirements for normal mortgages. And one of the technical complexities they create is the need for advisers to take account of how a particular lifetime mortgage could affect an individual borrower's tax and benefits. We hope our new guides, and the specialist software, will give lenders and intermediaries the tools they need to have confidence that they are successfully complying with the new lifetime mortgage requirements under the FSA regime."
