New equity release customers will be able to mitigate the costs of borrowing in later life through a new product safeguard which has been announced by the Equity Release Council.

From 28 March 2022, all customers taking out lifetime mortgages that meet the Council’s standards will be guaranteed the right to make penalty free partial repayments of their loans.

The industry body said the move will mean that new customers can not only reduce their borrowing, but offset the interest, without making any ongoing commitment to further repayments.

This fifth product standard is being introduced to mark the thirtieth anniversary of consumer protections first established by the Council’s predecessor, Safe Home Income Plans. Since 1991, more than 592,000 new equity release plans backed by Council standards have helped homeowners over the age of 55 to access £38.7bn of property wealth to support their finances.

Last year also saw the sector return to growth for the first time in three years, with over 76,000 new and returning customers making use of equity release in 2021.

“Updating our standards to lock down the ability to make partial repayments on lifetime mortgages – an innovative feature that has become increasingly common in recent years – provides flexibility for consumers and ensures the sector continues to evolve to meet changing demographic needs,” commented Chairman of the Equity Release Council, David Burrowes.

“As recent years have reminded us, people’s circumstances can change and customers who find they can use earnings, savings or an inheritance to reduce their borrowing in later life will be able to do so without incurring early repayment charges.

“Introducing a fifth product standard is the latest milestone in a decades-long commitment to robust consumer safeguards.”

Standard Life Home Finance head of sales, Kay Westgarth, added: “As an industry, we have come a long way in a relatively short period of time but there is always room for improvement.

“The introduction of a fifth standard is to be celebrated as it will allow customers to better manage their borrowing and ensure that products work for their individual circumstances. It is this type of innovation that will ensure we see another 30 years of growth and change for this vibrant market.”

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