ENHANCED LIFETIME MORTGAGE ADVISER GUIDE

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1 seeing retirement differently seeing retirement differently ENHANCED LIFETIME MORTGAGE CELEBRATING CELEBRATING YEARS sin ce YEARS sin ce

2 ABOUT PARTNERSHIP Partnership is the longest established UK provider specialising in financial products for people whose health and lifestyle mean that their life expectancy is likely to be reduced. We cater for clients with a wide range of health conditions, from the relatively minor such as high blood pressure, to the more serious such as heart failure, stroke and cancer. By looking at every aspect of a client s health, we aim to deliver the maximum benefit we can. We believe that our 20 years worth of accumulated data and knowledge gives us a unique understanding of the impact health and lifestyle choices have on longevity. This, in turn, enables us to offer a more accurate assessment of a client s life expectancy rather than the average and so we can usually offer better benefits than a mainstream insurer. The Enhanced Lifetime Mortgage can help you to help your clients release more cash through equity release. It has been designed specifically for people living with health problems. Utilising our unique underwriting skills, each Loan to Value (LTV) is based on the individual s lifestyle and health conditions as well as the property value. Partnership is an expert in the world of medical underwriting and from our launch back in 1995 we have rapidly grown to become one of the UK s largest providers of enhanced/impaired annuities. Partnership is in the great position of having its own in house team of underwriters. Over the years we have built a wealth of underwriting experience. This enables us to provide bespoke terms for each individual client. We have used this experience and knowledge to create an Enhanced Lifetime Mortgage to provide a better deal for your clients. EQUITY RELEASE COUNCIL MEMBERSHIP Partnership is a member of the Equity Release Council and the Enhanced Lifetime Mortgage meets their standards including: security of tenure for life, the right to move to another suitable property without an Early Repayment Charge being applied, and a no negative equity guarantee.

3 CONTENTS 04 PRODUCT FEATURES OUR LENDING POLICY INHERITANCE PROTECTION TARIFF CHARGES EARLY REPAYMENT CHARGES (ERC) ACCEPTABLE PROPERTIES AND APPLICANTS PROPERTY VALUATION

4 PRODUCT FEATURES ELIGIBILITY Minimum Age Age 65 for single lives, 70 for joint applications Minimum Property Value 70,000 Maximum Property Value Medical Underwriting The proportion of property value that can be used to assess the maximum loan is 100% of value up to 1m plus 50% of value from 1m 2m. Available only to clients with health or lifestyle factors which affect life expectancy LOAN AMOUNTS Minimum Cash Release 25,000 Maximum Cash Release LTV Scale LTV applied to up to 100% of the property value up to 1m plus 50% of value from 1m 2m. Dependent on age and medical underwriting FEES AND CHARGES Product Fees Early Repayment Charge No fees are charged for this product although the client is liable for their own legal fees An early repayment charge will apply, unless the repayment is due to the client s death or they move into long-term care or move to another property acceptable to Partnership details of how this is calculated are on page 8 Interest Fixed interest rate for the lifetime of the policy see for current interest rate 04 ENHANCED LIFETIME MORTGAGE

5 OTHER PRODUCT FEATURES No Negative Equity Guarantee Inheritance Protection Portability Additional Lending Included as standard Included as standard without additional charge where a client releases less than the maximum LTV available Clients may move home and take their loan with them, subject to property underwriting Subject to availability and terms and conditions at the time of applying. Only available once the main loan has been in force for 6 months. OUR LENDING POLICY Eligibility As with most lending products, there are several key requirements that your client will need to meet in order to be eligible for a Partnership Enhanced Lifetime Mortgage. Before you submit an application form, please check that your client and their property meet our lending criteria. The basic requirements are: Your client must be aged over 65 for single lives, over 70 for joint applicants. Your client must be a homeowner. Your client must be a resident in England, Wales or mainland Scotland. You must have completed on behalf of your client, our online medical/lifestyle questions to confirm eligibility, (via the Equity Release KFI generator, which can be accessed at equity-release.partnership.co.uk/login). The other requirements are related to personal circumstances, the size of the loan, and the property. Outstanding mortgages If there is a mortgage outstanding on the property then this must be repaid either before or at the start of the lifetime mortgage. The funds provided by Partnership can be used to clear this debt. Secured borrowing After starting the lifetime mortgage, the property cannot be used as security for any other financial agreement. Buildings insurance Your client must keep the property insured on an index-linked basis for a buildings sum insured not less than that recommended by the surveyor who values the property. The policy must include loss or damage by fire and such other risks as is usual for a residential property. A copy of this insurance policy must be lodged with Partnership prior to completion of the loan. ENHANCED LIFETIME MORTGAGE 05

6 Other occupiers On application, the home should be occupied by people who hold title to the property. If there is anyone else living in the property aged 17 or over, they must seek independent legal advice and sign an Occupier s Deed or Consent. (Please see the Application Form for further details.) Sheltered accommodation/age restricted properties Sheltered accommodation/age restricted properties will be considered but may be subject to a reduced loan to value. Your client must live in their own self-contained property with access to communal areas. Non-standard construction We will not consider non-standard construction. Please see the Acceptable properties and applicants section on page 10 for further information. INHERITANCE PROTECTION Taking out a lifetime mortgage will always reduce the amount of inheritance a client s beneficiaries will receive. However, if your client is concerned that they won t be able to leave anything when they die, the Enhanced Lifetime Mortgage offers an Inheritance Protection feature. This enables your client to protect part of their property s value to leave to their heirs. Provided your client chooses to release less than the maximum amount available then Partnership guarantees that a percentage of the property s value will be free of the mortgage no matter how long they live. Example Mr and Mrs Johnson need to borrow 60,000 and ask Partnership for a quote. We underwrite the couple s application and to their delight, we are actually able to offer a total of up to 75,000. Rather than take the additional 15,000, however, and run the risk of the house value being completely depleted when it is finally sold, Mr & Mrs Johnson decide they would rather leave something to their children. 15,000 equates to 20% of the total 75,000 they could have borrowed. We therefore write them a cheque for 60,000 and then contractually ring-fence 20% of the property s total value, preserving it in full for their estate. This means that when their property is finally sold, at least 20% of the proceeds of the house sale, regardless of the price at which it sells, can be passed on. This feature is applied automatically to the Enhanced Lifetime Mortgage if the LTV required is less than the maximum available. There is no additional cost for this feature and it does not impact the interest rate. Should your clients borrow more in the future, this will reduce the percentage of the property that is protected. 06 ENHANCED LIFETIME MORTGAGE

7 TARIFF CHARGES When taking out an Enhanced Lifetime Mortgage, there are some costs and charges that will need to be paid. Charges associated with the set-up of the mortgage We do not currently charge any application, arrangement, valuation or completion fees for our Enhanced Lifetime Mortgage. Your client will only have to pay for their legal fees and any additional costs incurred by our solicitors. Charges are shown in the Tariff Charges document. Interest rate The interest rate shown in the Key Facts Illustration (KFI) and Offer Letter from Partnership is an annual equivalent rate. Interest is added to the amount you owe monthly to give this annual rate, taking into account the effect of compounding. Interest is only ever charged on the loan amount outstanding. Once the advance has been made the interest rate for that amount is fixed for the life of the mortgage. Property Valuation We do not charge a fee for the independent valuation of your client s property. To enable us to do this cost effectively, the valuation report is for mortgage purposes only and neither you nor your client will be provided with a copy. (If you or your client wish to see a copy of the standard valuation report, please contact Partnership to obtain this.) Purchase If the report is for a new house purchase and your client requires a Home Buyers Report you/they will need to arrange this separately. Legal fees We will pay for our own legal fees and have appointed Eversheds as our solicitor. There may be some additional charges for properties where additional legal costs are incurred by Partnership, for instance: Unregistered properties Leasehold properties Properties to be purchased Additional telegraphic transfers The amount for these additional charges will be deducted from the initial advance before sending the money to your client s solicitor. In addition to our solicitor, your client will be required to appoint an independent solicitor. They must be different from ours and they will protect your client s interests. Your clients will be responsible for paying their own legal costs. ENHANCED LIFETIME MORTGAGE 07

8 Charges which relate to additional services requested after taking out the mortgage Where your client request changes to their mortgage there may be additional charges incurred. We will always tell your client what the charge will be before providing them with the service. Further lending Your client can arrange for further lending six (6) months after completion of their initial loan. They will need to complete a new application form and the fees and interest will depend on the terms available at the time which may include a fee to cover the valuation of their property. Moving home Your client will be able to transfer their existing mortgage under the same Terms & Conditions to their new property (assuming the new property meets Partnership s lending criteria at the time). They will need to pay the costs involved in any such move including: valuation fee on the new property; legal fees and estate agents fees. EARLY REPAYMENT CHARGES (ERC) Making an early repayment The loan may be repaid in full at any time and partial repayments may also be made, providing there is a minimum loan balance of 25,000 remaining. The loan is designed to be repaid when the client(s) dies or moves into long term care. If the mortgage is repaid at any time prior to either of these events taking place an early repayment charge may be payable on the Partnership Enhanced Lifetime Mortgage. We will not charge an early repayment charge when: Your client sells their property and transfers their mortgage to another property acceptable to Partnership. Your client (or the last surviving borrower) moves into long-term care. The mortgage is repaid after your client s death (or the death of the last borrower). An early repayment charge will be payable when The mortgage is repaid at any time for any other reason than those stated above. Why do we charge an ERC? The early repayment charge is calculated to recover costs that we incur when setting up the lifetime mortgage, together with any loss incurred to us due to a fall in long term interest rates since the start of the mortgage. 08 ENHANCED LIFETIME MORTGAGE

9 How is the ERC calculated? The charge payable is calculated based on the size of the loan; the estimated future term of the mortgage and any movement in the level of long term interest rates. At the time your client decides to repay their Lifetime Mortgage in full, the ERC will be calculated by multiplying (1) x (2) x (3) below: 1. The difference between the Benchmark Rate for their mortgage, and the Index Rate at the date of repayment. 2. The term until the younger surviving borrower reaches age 90 (or 5 years if greater). 3. The amount of the mortgage that they repay including all interest and charges. The mortgage offer will include a Benchmark Rate. This rate will be slightly higher than the current level of long-term interest rates at the point of illustration. Interest rates are measured using the FTSE UK 15 year gilt yield index, as published daily in the Financial Times. This index is used because it broadly reflects the expected term of our mortgages and provides an easily verified independent measure. If the index at the repayment date is the same or higher than the client s Benchmark Rate then there is no loss to us and no charge will be payable. An ERC will be payable if the Index Rate is lower than the client s Benchmark Rate. The maximum ERC that will ever be applied is 25% of your client s original loan. Are fees included in the ERC? Fees are included in the initial loan advance and are also factored into the calculation of the maximum ERC and the outstanding loan balance. Is the Cashback Value included in the ERC? Cashback is normally recouped within the first five years. If Cashback applies it is normally recouped within the first five years. If your client repays their mortgage within five years of the completion date, then the ERC will also include repayment of any cashback offered at loan inception. No interest will be charged on this amount. The maximum ERC within the first five years is therefore: Maximum ERC = (25% X Initial loan including fees) + cashback How an ERC is calculated for a partial repayment If your client decides to make a partial repayment of this lifetime mortgage, any ERC due is calculated as shown above but will be based on the amount that they repay, rather than the total balance on the mortgage. ENHANCED LIFETIME MORTGAGE 09

10 ACCEPTABLE PROPERTIES AND APPLICANTS This is a guide to acceptable applicants and the type of properties that we will accept as security. If there are any doubts about whether your client or their property is suitable, you should call us on or us at er-customerservices@partnership.co.uk before your client pays any fees. Once the case is agreed in principle with our underwriters, you will be given a case number that you will need to quote on the Application Form. Applicants and ownership Clients aged 65 years or over for single lives, 70 years or over for joint lives UK resident Single applicants who solely own the property Joint applicants who jointly own the property Tenants in common agreement in place (and no discretionary trust in place) Client who has a poor credit history Foreign nationals with permanent right to reside for more than three years Power of attorney Client has had bankruptcy discharged or IVA satisfied An ex smoker with a BMI of 45 and controlled diabetes 2. Clients aged 64 years or less for single lives, 69 years or less for joint lives More than two borrowers Applicants who are bankrupt or have an IVA Properties held by a Trust or by a Corporate body Properties that have shared ownership with the council or the developer or staircase purchasing arrangement Occupancy and usage Single applicant is the sole occupier Joint applicants occupy the property If there are age restrictions over who can live in the property. This may be subject to a reduced loan to value Properties with a small element used for some form of business or commercial activity If other people are living in the property (aged 17 or over) they must seek independent legal advice and sign an Occupier s Deed or Consent 10 ENHANCED LIFETIME MORTGAGE

11 Property type Houses, bungalows, flats and maisonettes are acceptable subject to the restrictions shown below: Main residences Located in England, Wales or mainland Scotland New build properties subject to an approved new build warranty Properties adjacent to commercial premises Second homes, investment properties that have been bought to let, mobile homes, temporary structures or houseboats Holiday homes where the planning permission limits the period of occupation or restricts the occupation to holiday use Located in Scottish Isles, Ireland, Northern Ireland, Channel Islands and Isle of Man Properties above commercial premises Property tenure Freehold houses Leasehold tenure with an unexpired term of at least 145 years minus the age of the younger borrower, or 65 years whichever is the greater Freehold flats where freehold is in respect of the whole building, subject to leases/ tenancies of the remainder of the block, and is acceptable to the local market (e.g. Tyneside flats) Properties with excessive annual service charges All other freehold flats or maisonettes Leasehold tenure with less than the required unexpired term ENHANCED LIFETIME MORTGAGE 11

12 Property value Properties that have a minimum value of 70,000 Properties that are valued at less than 70,000 Flats and maisonettes Flats including basement flats Flats adjacent to commercial premises Converted flats or maisonettes Flats within a block of 5 storeys or more where there is no lift Flats above 10 storeys Ex-local authority flats or maisonettes Studio flats Above commercial premises Land Properties with up to five acres of land Properties with more than five acres of land 12 ENHANCED LIFETIME MORTGAGE

13 Council estates/housing associations Ex-council properties/ ex-housing association properties Any ex-council flats or maisonettes Properties purchased through a Right to Buy scheme and still in pre-emption period Listed property The property is Grade II listed The property is Grade I listed The property is Grade II* listed Planning and occupation restrictions The property is Grade II listed If there are age restrictions over who can live in the property (will be subject to a reduced loan to value) Sheltered accommodation (there are a small number of exceptions and it will be subject to reduced loan to value) ENHANCED LIFETIME MORTGAGE 13

14 Agricultural properties Properties involved in commercial farming Properties with an agricultural tie Contamination If it is built on, or significantly close to a contaminated site Flooding Properties known to have flooded in the past five years If it is built on, or significantly close to a contaminated site Subsidence and movement Underpinned properties, subject to guarantee Properties considered as high risk to subsidence or movement 14 ENHANCED LIFETIME MORTGAGE

15 Construction Built of standard construction Properties with walls of brick, block or stone It is a historic timber framed property in an area of high marketability e.g. historic towns It is a modern timberframed property, built after 1960 It is a property with pitched roof made of slate or tile Wimpey No fines construction Properties with a steel frame, built after 31 December, 2000 Timber framed properties built before 1960 Properties that have a flat roof which is limited to a small percentage of the total property (for example, a flat roof over a garage or extension) Properties that are built of a limited amount of single skin brickwork/blockwork Laing Easiform Properties with walls of cob Properties built entirely of timber Properties with roofs of thatch or timber shingle The external walls of the property are built entirely of single skin brickwork All other in-situ cast concrete properties Properties with concrete panel construction Precast reinforced concrete (PRC) properties Pre-fabricated properties Ex-local authority steel frame properties Properties with a steel frame, built before 31 December, % flat roof ENHANCED LIFETIME MORTGAGE 15

16 PROPERTY VALUATION Once we have received the Application Form we will instruct a professional valuer to contact your client and arrange a time to visit the property. They will inspect the exterior and interior of the property and note any defects which need attention. The valuer will also obtain the sold at price (as recorded at the Land Registry) for three comparable properties which have recently been sold in the area and have similar specifications. These comparable values will then be used as a basis for valuing your client s property and the valuer will take into account the relative conditions and locations of the properties. For example it may be on a quieter road or a better location. Please note that the valuation report is for mortgage purposes and is not suitable for disclosure to your client. The valuation The professional valuation figure will be displayed in the Offer letter and also used in the amended KFI. Any repair works which need attention will be shown in the Offer letter under Special Conditions. If you wish to discuss the outcome of a specific valuation, please call our underwriting team on (option 4, then option 2). The valuation review process If the valuation of the property within the valuation report is lower than the estimate you have included in the KFI, and it prevents us from lending the amount your client wishes to borrow, we will notify you and request that you generate an amended KFI and agree this with your client. If you or your client believes that our valuation does not reflect the value the property would be sold for, you have the right to request that the valuation is reviewed. For us to effectively review the valuation you will need to supply other similar comparable properties which have sold within the last 6 months. You will also be requested to supply the sold at values for these with a note on what are the differences between them and your customers property. See an example on page 17. To help you do this, sold for values can be obtained from several websites such as and If after this comparison has been done, you would like us to review the valuation, a Valuation Review form is available from our website, within the equity release section. 16 ENHANCED LIFETIME MORTGAGE

17 Estimating Property Valuation Supporting Evidence To allow us to create an illustration, we ask for you/your client to estimate the value of their property. Please use the following information to help create the estimated valuation. We ask that the estimate is based on sold prices for comparable properties in the local area within the last 6 months We have provided an example below: Property details Property Address Postcode 10 Allen Way CF34 5JU Client s Estimated Value 110,000 Value/Justifications Property was on the market at 115,000 a few months ago Comparable information Please record details of comparable properties sold within the last six months to help estimate the current value of the property to be mortgaged. Sold for values can be obtained from several websites such as or PROPERTY 1 PROPERTY 2 PROPERTY 3 Address Postcode 15 Allen Way 34 Southern Way 78 Amber Close Sold for price 105,000 95, ,000 Date sold 20/07/ /06/ /08/2013 Condition e.g. fair, good, modern Fair Good Modern Accommodation size e.g. no. of bedrooms, receptions, garage etc. 3 beds 2 reception garage 2 beds 2 reception garage 3 beds 2 reception garage Type e.g. bungalow, detached etc. Age or date of property built Please detail any similarities or differences to the client s property details which may have influenced the price Semi-Detached Semi-Detached Semi-Detached 1950 s 1950 s New Build No conservatory Only 2 beds New build, modern with conservatory ENHANCED LIFETIME MORTGAGE 17

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20 Regent House, 1-3 Queensway, Redhill, Surrey RH1 1QT * *Telephone calls may be recorded for training and monitoring purposes. Local call rates apply. If you require this document in an alternative format please contact us. Partnership is a trading style of the Partnership group of Companies, which includes; Partnership Life Assurance Company Limited (registered in England and Wales No ), and Partnership Home Loans Limited (registered in England and Wales No ). Partnership Life Assurance Company Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Partnership Home Loans Limited is authorised and regulated by the Financial Conduct Authority. The registered office for both companies is 5th Floor, 110 Bishopsgate, London EC2N 4AY. ELM