Standard Life Home Finance offers new ‘interest served’ equity release product – Mortgage Finance Gazette

Standard Life Home Finance is offering a new payment option on its ‘interest reward’ product, designed to widen the appeal of these equity release products.


Its Horizon Interest Reward product, launched in January, will now offer a 25% interest served option. This give customers who commit to paying 25% of the interest over a set period of time a discount off the standard lifetime mortgage rate.

Previously Standard Life offered discounted rate options to customers who agreed to repay 50% or 100% of the interest, again over a specified period of time.

The discount will depend on the percentage of the interest served and the length of the contractual term. This model will also reduce the overall cost of borrowing on these equity release products.

For example, if a customer commits to servicing 25% of the interest on a Horizon 300 plan, the customer will get a rate discount of 0.03% in five years, 0.06% in 10 years, and 0.09% in 15 years.

On the other end of the scale a 100% interest payment on the Horizon 530-620 plan unlocks a 0.75% discount in 15 years.

These plans are open to applications from any customer between the ages of 55 and 84.

The offering will still include a standard ‘no negative equity guarantee’ and customers also have the option to make additional voluntary partial repayments. Up to 10% of the initial loan can be paid back in a non-overlapping 12-month period with no additional ERCs.

Standard Life Home Finance sales director Kay Westgarth says: “As the typical profile of later-life lending customers evolve, so too must the range of products available to them. This latest update to our Horizon Interest Reward product will enable more homeowners to benefits from lower interest rates and larger discounts.”

She adds: “The next generation of homeowners are likely to lean on later-life lending to support their mortgage repayments throughout their life, and so we are committed to offering flexible and affordability-centred options.

“Advisers play a crucial role in laying out all of the options available to customers to make sure people take out the right products that meets their personal needs.”

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