Norwich Union has been criticised over its Lifetime Mortgage contract, which is technically an equity release product. Basically, you take out a loan against the value of your house and the interest rolls up until your death.
Norwich Union's lifetime mortgage product does not guarantee that the interest rate you apply for is guaranteed. This means that the rate applicable when you apply, could be higher or lower when the contract completes. This has sparked controversy in the industry and has led to Norwich Union investigations.
There is also a problem with rather hefty penalties, should you decide to repay your lifetime mortgage before death.
Our View
Norwich Union's contract is very complicated and most people will never fully understand everything about it. Even many advisers have had trouble when different scenarios have been posed.
A slight change in interest rates payable can make a huge difference because it is rolled up.
There are many alternatives to lifetime mortgages and we believe that all of them should be considered before making a decision. The financial implications of making the wrong choice could be very painful!
Always take advice.Visit our equity release pages in Mortgage Crazy.com.