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The Retirement Lifestyle Booster is a 10 year interest-only mortgage that is repaid with a lump sum at the end.

Compared with a standard interest-only mortgage there are two key differences:

  1. The loan amount is paid out in monthly instalments on the 10th working day of each month. Same amount every month for 10 years unless you tell us to stop it earlier. Any existing mortgage is repaid from the agreed loan at the start of the Retirement Lifestyle Booster, along with the optional lump sum.
  2. Interest is charged on the balance outstanding each month, just like a normal mortgage. As the balance builds up the amount of interest charged increases, just as you would expect. What’s different is that you pay us an amount each month that covers the ‘average’ interest due over the 10 years of the loan. That’s more than just the interest due in the early years (the excess reduces the balance on which interest is charged) and less in the later years.

After 10 years the amount outstanding is the amount you’ve borrowed. You then pay back this amount.

The graph below illustrates this using an example loan of £500 per month for 120 months (£60,000) and an interest rate of 3.44%. The actual interest rate available for new Retirement Lifestyle Booster mortgages will vary from time to time.

retirement-lifetsyle-booster-graph-72dpi

The interest rate is variable and may rise or fall in future. If that happens we’ll recalculate the monthly amount you pay us, which may go up or down. The representative example below illustrates this.

We’ll also recalculate the monthly amount you pay if you repay some of the money borrowed early or ask us to stop making the monthly loan payments to you.

Otherwise the monthly payment you make to us won’t change.

Four important points to note:

  1. Unlike Equity Release plans where you have no monthly repayments and the interest due rolls-up thus increasing your debt, by using the Retirement Lifestyle Booster the amount you owe at the end of the 10 year term will be the same as the amount we have lent to you.
  2. If interest rates rise and the payment you have to make to us increases to the point that you feel the Retirement Lifestyle Booster is no longer appropriate, then you can end the mortgage by repaying the balance outstanding. As long as the mortgage has been in place for more than three years, no Early Repayment Charge will be payable and the only extra cost in addition to the mortgage balance outstanding is our Mortgage Exit Fee (currently £100). This may mean selling your current home sooner than you had planned to do so or using another source of capital.
  3. At the end of the 10 year term you are required to repay the outstanding loan in full. This can be done by selling your home and moving to a lower value property, or using other money you then have available.
  4. By the ‘average’ interest due, we mean the amount required to leave the balance outstanding at the end of the 10 year term equal to the amount we have paid to you, less any money you opted to repay early.

Representative example:
A mortgage of £122,000 payable over 10 years on a discounted variable rate for 10 years at 1.10% below our variable Managed Mortgage Rate, currently 4.54%, would require 119 monthly payments of £259.25 plus one initial interest payment of £182.66. 

The total amount payable would be £154,307.41 made up of the loan amount plus interest of £31,033.41, an application fee of £175 which includes the valuation fee, a product fee of £999 and a Mortgage Exit Fee of £100.

The overall cost for comparison is 3.7% APRC representative.

Using the representative example above, if interest rates rose by 1% at the end of year 3, your new monthly payment to us would increase to £340.50. If interest rates rose by a further 1% at the end of year 5, your monthly payment would increase to £426.83.

THE MORTGAGE WILL BE SECURED ON YOUR HOME

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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Family Building Society
Ebbisham House
30 Church Street
Epsom
Surrey KT17 4NL
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