Leon Diamond, CEO and founder, LiveMore, has commented on the lifetime mortgage sector report published today by the Financial Conduct Authority.
He said: “We wholeheartedly welcome the FCA’s report into the lifetime mortgage sector, which highlights practices in the industry that deserve the regulator’s attention.
“The effect of compound interest on a lifetime mortgage is significant, especially in a high interest rate environment, making this form of finance expensive if a mortgage is held for many years. So, if a standard mortgage is affordable, that is usually the best outcome for the customer and there is an easy way to find that out.
“We are firmly of the view that an affordability assessment should be undertaken, in all cases, before any decision is made about going down the route of a lifetime mortgage.
“A fundamental part of an advisor’s role is to fully understand the income and outgoings of customers. This provides a clear picture of whether they can afford monthly mortgage repayments and should be the first option to consider. If an interest-only or a capital and repayment mortgage is not affordable then a lifetime mortgage could be the second option.
“We published a white paper in June, Consumer Duty: why later life lending is about to change forever. It highlights why Consumer Duty is good for the industry and as a solutions-led lender, we abide by the rules and welcome them with open arms.
“Anything that improves the industry for the good of the consumer can only be a good thing and this report from the FCA is a strong reminder for every broker and lender to put the customer first.”