Canada Life is known for producing innovative retirement products that can be easily tailored to suit the needs of individual homeowners. Previously known as Retirement Advantage and prior to that - Stonehaven Equity Release, Canada Life continues to produce unique products for homeowners who are looking for equity release schemes. The Interest Select range of products is one series of interesting schemes available to homeowners and is available in two versions which are the Platinum and the Gold.
There are only slight differences between the products offered in the Interest Select range. Primarily, the Platinum Plan offers higher loan-to values which also means that the interest rate is higher. So, homeowners will likely choose the product best for them based on the loan amount they require. The Interest Select Gold plan provides homeowners with the opportunity to pay some, or all of the interest on their loan each month. So, the homeowner has some control over their loan balance, making this a good option for any homeowner who is concerned about the impact of interest roll-up.
Loan amounts available with this product range from £10,000 upto a maximum lifetime mortgage amount of £750,000. In order to be eligible, the homeowner must be between the ages of 55 and 90. If borrowing on a joint life basis, the youngest borrower needs to be 90 years old or younger. In order for the property to be eligible, it must have a valuation between £70,000 and £6 million, though any property that has a higher valuation than £6 million can still be reviewed on a case-by-case basis. The property must also be located in England, Scotland, or Wales and be a main residence.
The repayment feature of this Canada Life product is one of its most attractive options. It allows the homeowner to decide if they want to pay all, or part of their interest. The homeowner can choose to only repay a portion of the interest, allowing the loan balance to still roll-up and compound. This will, of course, be at a different rate given that some payment was made against the loan. If the homeowner chooses to repay all of the interest, the balance simply remains level for the full lifetime of the loan. The interest payments can range from 50% to 100% of the total interest each month and the time period for payments to be made can be anywhere from 5 years to the full lifetime of the loan. One important aspect of the repayment option is that once the payment amount and term have been established, they cannot be altered in any way.
On the Canada Life Interest Select Gold Flexi the homeowner can stop making interest payments if they choose, but once they do, the payments cannot be restarted. If the homeowner stops making payments before the interest paying term is up, the loan is converted to a standard interest roll-up scheme and the interest rate on the interest paying part of the loan is increased by 0.2%. The homeowner can miss up to 4 payments over the course of the lifetime of the loan. Once the fourth payment is missed, the loan automatically converts to a roll-up scheme with the increase of 0.2% added to the interest rate.
Payments are made directly from the homeowner’s bank account on the first working day of each month.
Another key feature of this product is its early repayment charges, which are fixed for the first 8 years of the loan. For years 0-5, the charge is 5%. For years 6-8, it is 3% and for years 9 and above, there is no charge applied.
Downsizing protection comes standard with the Interest Select Gold Flexi, as does a no negative equity guarantee. With downsizing protection, the homeowner has the ability to repay their loan if they choose to sell their home and move to another one, so long as that move takes place at least 5 years after loan completion.
The no negative equity guarantee protects the estate of the homeowner in the event that the eventual sale of the property does not satisfy the outstanding loan balance. If that happens, the estate and the homeowner’s loved ones are not held responsible for the remaining balance.
Additional borrowing is available with this product, approval for which depends on the lending criteria at the time of application. The homeowner has to stay within their original LTV range and cannot switch to a higher LTV product. The minimum amount available for additional borrowing is £4,000 and the maximum is the maximum left available in the product range. The homeowner is allowed to make payments against the interest on their additional borrowing as well. The LTV’s for the Interest Select Gold start at 19% for age 55 and go up to 44% for ages 80 to 90.
A cash reserve facility is available with the Canada Life Gold Flexi which increases the applicable interest rate by 0.2%. The amount available for the cash reserve is determined based on the amount available less the initial loan advance to the homeowner. The minimum withdrawal amount available is £2,000. Withdrawals can be made at any time, but only one request can be in-process at any given time.
The Canada Life Interest Select Gold Flexi is most suitable for a homeowner who is concerned about interest roll-up and is able to make regular payments of some, or all of the interest on their loan. This gives the homeowner some control over their overall loan balance and allows them to protect and inheritance for beneficiaries, if that is a concern.
* £1000 cashback available for loans over £40,000
Call the Compare Equity Release team on 0800 028 3142 for further details, or to request your personalised Canada Life Interest Select Gold Flexi quote.