We would like to see all lifetime mortgage lenders relax their policy on early redemption charges.
Currently ERCs are waived in the event of a client dying or entering long term care. They are also waived on partial repayments due to downsizing. However, they are applied if the client does not port a certain amount of the lifetime mortgage and instead repays in full.
When a client expresses a possible future intention to sell their property and repay the whole plan, several lenders are impossible to recommend because they have ERCs that range from 0-25% subject to interest rate or gilt movements. Their products may be otherwise perfect for the client but we have to exclude them from.
In reality many of these clients may never sell but they want the option without the threat of a potentially huge penalty.
A change would be in everyone's best interests. It would give the lender more business and give clients more choice.
David Wright
