The Bank’s entrance to this growing market follows a long period of careful preparation, taking into account the needs of its customers and in particular the need for them to know the risks of equity release. Making use of Standard Life’s experience as a life insurer, the Bank is well placed to help consumers understand the benefits of equity release as part of a long-term financial plan.
Anne Gunther, chief executive of Standard Life Bank, said:
“Our customers want to understand the risks of equity release and they want to properly plan their financial future. Their home is an asset and we believe our equity release mortgage has been designed to make this asset last a lifetime. We have deliberately not designed our product to be used to maximise short-term gain to the detriment of long term financial security. We regard a long-term view as just as important when you reach retirement age because these days retirement can last for decades. Even at 60 we need to take a 20 or 30 year view of financial planning.
Standard Life Bank has paid careful attention to how this mortgage is sold. Freestyle Home Cash Plan will only be available through an independent financial adviser. Those applying will be asked if it is more appropriate that they sell their house and move to a smaller property before deciding to go for equity release. Standard Life Bank will also encourage customers to talk to the beneficiaries of their estate so that relatives are aware of the impact of equity release on their inheritance. Other features which will protect customers are the no negative equity guarantee, the lifetime security of retention of property ownership, and the option of further advances. In addition, our membership of Safe Home Income Plans (SHIP) provides added reassurance.
Anne Gunther continued: “Freestyle Home Cash Plan has been designed for the long-term financial wellbeing of our customers. For example, we will limit the proportion of equity drawn down at age 60, but lend a larger proportion of the value of the home to an 80 year old. By being prudent at the beginning of retirement, we are building in further flexibility for whatever the future brings, both for emergencies and opportunities. We believe our customers will come back for more at a later stage.”
Standard Life Bank launched in 1998 and entered the UK mortgage market with Freestyle in 1999. Its mortgage balance has grown to £8.6 billion. Freestyle is designed not just to finance house purchase or remortgage activities. It is a financial planning tool whereby individuals and families can make their mortgage work harder, delivering better value on big financial commitments such as school or university costs, and healthcare or retirement planning.
Freestyle Home Cash Plan is a further evolution of this concept, allowing retired people to unlock the cash in their homes in a flexible but prudent manner to meet their emerging financial needs.
