Legal & General Home Finance launches new lifetime mortgage that pays monthly income

• Legal & General Home Finance has announced the launch of a new lifetime mortgage that pays customers a fixed monthly income
• The new product is aimed at customers who want to supplement their income to help them maintain their standard of living and enjoy their retirement
• The option is another step by Legal & General Home Finance to give customers more flexibility in how they access their property wealth in later life

Legal & General’s Income Lifetime Mortgage provides customers with a regular monthly income over a fixed term to help them maintain the lifestyle they want in retirement.

The new product aims to provide a lifetime mortgage solution for consumers who prefer a fixed monthly income to a lump sum or who haven’t been able to save as much into their pension as they would have liked, or their pension may not have lasted as long as they hoped. It’s therefore a compelling option for those wanting to bridge a retirement income gap, so that they can enjoy a more comfortable standard of living in later life.  

Like Legal & General’s Flexible Lifetime Mortgage range, interest on the mortgage will roll up over the life of the loan. The loan and interest will be repaid from the sale of their property upon the last surviving borrower’s death or a move into long-term care. However, with an Income Lifetime Mortgage the effect of compound interest is reduced as funds are released in monthly amounts, rather than lump sums.  

The product will be available to people aged 55 and over with a minimum property value of £100,000. Customers will be offered an interest rate that is fixed for life at the outset, while the monthly income from the mortgage will run for an agreed term of 10,15, 20 or 25 years and cannot be extended. At the end of the fixed term, the monthly income will stop and interest will continue to roll up until the mortgage is repaid. Consumers can choose to stop this income at any point, but once stopped the income cannot be restarted.

As with Legal & General’s other lifetime mortgages, customers will need to speak with an adviser who can help them to determine whether the Income Lifetime Mortgage is the right solution for their retirement plans. Customers will need to consider the option carefully, as it could affect their entitlement to means tested benefits.

A lifetime mortgage is a loan secured against the client’s home.  The amount that can be borrowed depends on a client’s age, the value and suitability of their home and whether they are applying jointly or as an individual. Dependent on the type of lifetime mortage chosen, the client receives a cash lump sum, smaller amounts as and when required, or a regular monthly income. Interest is added to the amount they owe each month, which means we charge interest on the loan plus any interest already added. The lifetime mortgage is usually repaid from the sale of the property when the client(s) dies or leaves the property for long term care. There may be cheaper ways to borrow money.