The rate was formerly 6.25 per cent. At the same time GE Life is calling for greater transparency and simplicity in the lifetime mortgage market.
The lifetime rate cut is GE Life’s third since May – when it dropped its rate from 7.19 per cent to 6.69 per cent. Since then a number of providers have followed suit, increasing value for customers and taking lifetime mortgage rates even closer to their standard mortgage counterparts.
Simon Little, marketing and product manger for GE Life, said: “Lifetime mortgages have come a long way since the beginning of the year, due to the innovation of companies like GE Life. And with market rates continuing to remain affordable there is no excuse for other lifetime mortgage providers not to pass on these favourable rates.”
GE Life is supporting the rate change by calling on providers to improve transparency in the industry - specifically by compounding interest rates annually instead of monthly. Compounding rates monthly enables providers to claim a lower headline rate, which actually provides less value to the consumer. To provide the same value as GE Life’s product, a monthly compounded product would require a headline rate of 5.74 per cent per annum*. GE Life’s current rate could save a typical customer borrowing £76,000 over £20,000 over the course of 15 years.
Further enhancements to the product include improved LTV rates for those aged 60 to 77. GE Life will also commence paying its own legal fees – saving consumers even more money. For a limited period only, GE will continue to pay clients £500 cash back on completion for all applications received by the end of this year.
Simon Little added: “The response to our product, especially our aggressive stance towards interest rates, has won us many friends in the intermediary world. At the same time we have introduced better value products to the market, the real winners of which are the consumers. These latest amendments to our product, particularly the reduction in interest rates and that we will now be paying our own legal fees, make us confident we can offer one of the best lifetime products on the market.”
GE Life’s Equity Release Lifetime Mortgage, which is available solely through financial advisers, features:
*Fixed interest lifetime mortgage with interest compounded annually
*No negative equity guarantee
*Clear fee structure - no hidden costs
*Minimum loan value of £25,000
