One Family – Voluntary Payment Lite – Variable Rate Details

Background

OneFamily was formed in 2015 by the merger of Engage Mutual and Family Investments which combined has created one of the largest Mutual organisations in the UK. OneFamily is a trading name of Family Assurance Friendly Society with over two million members and managing £7 billion of family money. OneFamily see Lifetime Mortgage lending as its natural progression into the retirement arena where it currently specialises in Guaranteed Over 50s Life Cover.

OneFamily are taking a giant leap forward for the equity release industry in further building consumer confidence and competitive products. OneFamily are the first lender to offer a variable interest rate product, linked to the Consumer Price Index (CPI) with addition of a fixed rate option too. Choice is important and with this comes a range of flexible features for the homeowner to be able to discuss with their equity release adviser. This is a new bold step for the Equity Release marketplace and effectively brings equity release rates in line with conventional mortgage interest rates.

Eligibility

The OneFamily Voluntary Payment Lifetime Mortgage offers homeowners a simple one-off lump sum cash payment to spend as they wish. This product is maybe geared towards homeowners looking for the lowest rates possible, and wishing to have the flexibility of making repayments to prevent interest roll-up and thereby controlling the future balance. This product maybe ideal for those with mortgages at or near retirement which are in need of repayment, but have no exit strategy in place and cannot provide proof of income. Additionally, we can see the product being used as part of IHT mitigation exercises and those who understand the implications of variable interest rates.

OneFamily Equity Release will accept applications on property values with a minimum of £70,000 and a maximum of £1.75m. The property concerned must be a main residence and needs to be located within England, Wales or Scotland. It needs to be either freehold or leasehold status which has an unexpired term of at least 155 years minus the age of the youngest applicant, or 75 years whichever is the greater.

This OneFamily Voluntary Payment Equity Release plan is available on both a single & joint life basis. The minimum age of the youngest applicant must be 55, with a maximum age at entry of 100 years. The minimum loan amount OneFamily will accept is £10,000 with a maximum release currently of £500,000.

Features

The OneFamily Voluntary Payment Lite scheme is a roll-up lifetime mortgage plan that offers one of the lowest interest rates from the whole suite of OneFamily schemes. OneFamily’s Voluntary Payment Lite equity release plan provides a one-off tax-free capital amount which can be spent on anything the applicant wishes.

The main focus of this product is the headline interest rate which brings equity release interest rates in line with residential mortgages. For the first time in the equity release market, homeowners have the benefit of choosing between fixed or variable interest rates, depending on their preferences. The introduction of the OneFamily variable interest rate equity release product is a significant leap forward for the equity release industry, offering greater choice to the consumer.

The Voluntary Payment Lite interest rate is calculated by utilising a base interest rate (collar). OneFamily take the annualised Consumer Price Index (CPI) figure every September & add this to the collared base interest rate every December. The sum of these two figures gives us the interest rate that will be charged for the following 12 months, effectively giving a one-year reviewable fixed rate. To counter any run-away interest rates, OneFamily provide an interest rate cap, which means an upper interest rate limit is applied to the scheme. This provides a guarantee of the maximum interest rate that OneFamily can ever go upto for the lifetime of the plan.

The Lump Sum Voluntary Lite plan differs from the Lump Sum Standard scheme by having lower loan-to-value percentages at any given age. This results in an Equity Release Calculation showing a lower maximum loan amount on the Lite range of plans, but their advantage is that they do benefit from lower interest rates. The OneFamily Voluntary Payment Lite range start at age 55 with maximum loan-to-value percentages of 15% for joint lives & 16% for a single life.

OneFamily are members of the Equity Release Council and subsequently all their plans on both fixed & variable rates come with the security of the No Negative Equity Guarantee, ensuring beneficiaries never end up owing more than the value of the property & subsequently they themselves owe nothing to the lender.

A beneficial fixture of the Voluntary Payment Lite Plan is the inclusion of the Downsizing Protection feature. This allows anyone downsizing after a period of 5 years to be able to repay their OneFamily equity release plan in full, with NO early repayment charges. If downsizing occurs within the first 5 years, then the standard fixed early repayment penalties would apply.

Another strong feature of these Lump Sum Interest Roll-Up Lifetime Mortgages are the fixed early repayment charges (ERC). OneFamily only charge an ERC for the first 10 years following the commencement date of the equity release loan. The ERC starts at 6% for the first 5 years, then reduces to 3% for the next 5 years and then NO penalty thereafter.

Options

The OneFamily Voluntary Repayment plan has no regular payment commitment imposed, therefore the interest if required can be left to roll-up. However, the Voluntary Payment plans include a flexible 10% per annum repayment option, allowing homeowners to make repayments to OneFamily without any penalty. These payments can therefore help control the future balance and ultimately the final inheritance for beneficiaries.

*Free valuation offer on property valuations upto £1m (pro-rata thereafter) & for limited time only