Advantage Options

Frequently asked questions

• What does the Advantage Lifetime mortgage offer?

  The Advantage Lifetime Mortgage lets your client pay some or all of the monthly interest, which means they could get a lower interest rate. If you recommend this option, your client will receive a discount on their interest rate by making monthly payments of 25%, 50%, 75% or 100% of the interest. Paying monthly interest helps reduce the overall cost of their loan. The more interest your client pays each month, the bigger their discount. Once the mortgage is set up, their monthly payment amount can’t be changed, but they can choose to stop making payments at any time.

• How do your clients make the monthly interest payments?

  Monthly payments will be taken by direct debit, starting on the first working day of the month after the mortgage completes. The first payment may be higher than usual, as it covers the period from completion until the start of the following month.

• What if your client misses a monthly interest payment or stops making payments?

  If your client is unable to make a payment, please let us know. They can miss up to three payments over the life of the mortgage, and any missed payments will be added to the loan balance. If they miss more than three payments, they won’t be able to restart them, and the interest rate will go up because the discount will no longer apply. Your client’s mortgage will then switch to a roll-up mortgage, where interest is added to the loan each month.

• Can your client make extra payments towards their loan?

  Yes, your client can make voluntary payments of up to 10% of the original loan amount each year without any early repayment charges. These payments can be made by standing order or bank transfer. The minimum payment allowed is £50. Canada Life will conduct a source of funds check if the voluntary repayments exceed £20,000 in any 12 month period. Monthly interest payments are excluded from the £20,000 calculation.

• Can your client borrow more money later?

  Your client can apply for extra borrowing (a further advance) if they need it, with a minimum of £4,000. They’ll need to take financial advice first. They can choose to pay interest on their extra borrowing and get a discount if they pay at least 25% of the monthly interest. As with their initial loan, the monthly payment amount can’t be changed once set up, but they can stop making payments at any time. The interest rate for extra borrowing may be different from the original loan.

• Will your client need to undergo affordability testing?

  Canada Life won’t check if your client can afford the monthly payments, as they can stop them at any time. You will need to ensure that this type of mortgage is right for your client. Remember, if they stop making payments, the interest rate will go up.

• Can my client add a Cash Reserve Facility?

  Cash Reserve Facilities are not available on the Advantage Lifetime Mortgage product.

• Are there any early repayment charges (ERCs)?

  Your client can repay some or all of their mortgage whenever they like, but an early repayment charge may apply if they repay within the first ten years. These charges are fixed, so they'll always know the cost:

  Year 0-1 - 8%, Year 2 - 7%, Year 3 - 6%, Year 4 - 5%, Year 5 - 4%, Year 6 - 3%, Year 7 - 2%, Year 8-10 - 1%, Year 11+ - 0%

• Are there any waivers for early repayment charges?

  We know that sometimes life changes and your client may want to repay their mortgage. That’s why we offer two waivers:

  • Downsizing protection: If your client decides to downsize after three years, they will not need to pay an early repayment charge.
  • Early repayment waiver for joint borrowers: Your client will not need to pay an early repayment charge if they decide to repay the lifetime mortgage within three years of the date that the first borrower dies or goes into long-term care.

  We also won’t apply an early repayment charge in the following situations:

  • Repayment takes place after your client’s death or the death of the remaining borrower.
  • Your client or the remaining borrower move into long-term care.
  • The early repayment charge term has expired.
  • Your client sells the property and transfers the mortgage to another suitable property.
  • Your client stays within their 10% annual contribution allowance.

• What happens if your client moves home?

  Your client can transfer their lifetime mortgage to a new property, as long as it meets our lending criteria at the time.