Last month I wrote about the great value that is starting to be seen in the lifetime mortgage market space as the providers compete for business and drop their interest rates. We have also been waiting for Legal & General to announce it’s involvement in the arena, an event that we hoped would bring fresh thinking and even more competitiveness amongst the lenders.
L&G have now announced their route to market and are initially funding Newlife whilst the deal goes through for a purchase. L&G will acquire 100% of New Life Home Finance Limited (“Newlife”) for a consideration of £5m. Newlife is a privately owned UK-based provider of lifetime mortgage products. The acquisition by Legal & General’s Retirement division is expected to complete during H1 2015, subject to FCA approval.
Bernie Hickman, Managing Director of Legal & General’s Individual Retirement business said: “We are delighted to announce our acquisition of Newlife and our entry into the lifetime mortgage market. Over 60s in the UK have nearly £1.3 trillion in housing equity and we believe lifetime mortgages will become an increasingly popular way for many people to supplement their retirement income.
Peter Lucas, Executive Director and Co-founder, Newlife Group said: “We are looking forward to being part of Legal & General and to continue to build on the successful base we’ve established in the lifetime mortgage market. With Legal & General’s reputation as a highly regarded customer focused brand and access to their distribution networks, we will be able to help meet the needs of more customers and so become a leader in this growing market.”
Personally, I agree with Peter Lucas. Equity Release has long suffered a reputation for being all the things that it is not given the current deals that are available. It is considered to be expensive and inflexible, even risky or unsafe. Another highly regarded, true household name offering lifetime mortgages to the consumer can only add confidence to the sector.
We look forward to seeing the reaction from the existing providers now that they know the L&G / Newlife proposition. Newlife are offering three competitive products that will go head to head with the other providers on rate, features and loan to value. With current rates so low and flexibility within the products at an all time high it is difficult to see how lifetime mortgages can improve from here.
By Les Pick, National Sales Manager at The Right Equity Release