Capped rates for equity release loans
Bluestone Equity Release has added a capped for life variable interest rate loan to its EquityTap range of reverse mortgage products, said to be the first capped variable rate product on the market.
Priced at 8.19 per cent, the variable capped loan will be capped at 1.7 per cent (at launch) above the variable interest rate for the life of the loan, at no extra cost to the client.
The new loan will now be offered alongside an existing fixed for life interest rate loan in Bluestone’s EquityTap product range.
Both products offer clients the option of receiving their loan funds as a lump sum, a series of monthly instalments over five or 10 years, or as a combination of these two.
The capped variable loan was launched as an “alternative to our fixed rate environment for clients seeking greater loan flexibility while retaining lifetime interest rate protection”, said chief executive Peter McGuiness.
“It offers clients lifetime protection in a high interest rate environment, while allowing them to take advantage of any future interest rate reduction as soon as rates drop below the cap.”
McGuiness said that at 8.19 per cent, the product is very competitively priced, ahead of the majority of uncapped variable rate products on the market, and also allows for voluntary loan repayments at any time.
The company’s standard fixed for life rate on the lump sum option was recently reduced from 8.49 per cent to a current 8.39 per cent.
McGuiness added that both loan products would “meet the expectations of retirees as well as consumer groups and regulatory authorities on interest rate protection.
“Our research has found an underlying need for retirees to be protected from the risk of future interest rate rises, as well as continuing to retain ownership of their property.”
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