Lifetime mortgages could become integral part of retirement planning, says Defaqto

Date:Tuesday 24th August 2010
Author: Susanna Kavka

A finance expert from Defaqto has suggested that more people may soon use lifetime mortgages to help them plan for their retirement.

David Black, banking specialist at the firm, noted that many individuals' pensions are in a "perilous state" and predicted that lifetime mortgages may soon become a more "integral" part of their plans for when they finish working.

His comments were made after Defaqto found that the difference between the interest charged on a long-term fixed-rate mortgage and a lifetime deal is getting larger.

He said: "The gap between interest rates charged by lifetime mortgages and long-term fixed-rate residential mortgages has widened considerably over the last two years."

Research by the company showed that the 'differential' between the two types of products was 0.31 per cent in August 2008 and 1.45 per cent this month.

Last month, the same organisation revealed that the number of discounted-rate mortgage arrangements on offer has fallen by 72 per cent over the past three years.