The Nationwide Building Society is launching a lifetime mortgage product.
In summer 2016 Nationwide extended its borrowing in retirement options by raising the maximum age on maturity from 75 to 85 for retired applicants with a stable income. Now, the Nationwide Lifetime Mortgage aims to help a broader range of customers wishing to borrow in later life so that they can unlock the often-substantial equity tied up in their property.
Nationwide’s Lifetime Mortgage does not require any repayments during the customer’s lifetime. Interest is added to the sum borrowed, with a rate fixed for the term of the mortgage, and the total rolled-up amount is repaid only at the end of the customer’s life or if they go into long term care.
It is available to both new customers and existing Nationwide members aged between 55 to 84. The fixed mortgage rates are divided into four tiers based on different amounts of loan to value (LTV) and starting from 3.80%.
In addition, there are no product, valuation or advice fees to the customer taking the Lifetime Mortgage product. Loans are available at up to 46% LTV, with the amount available to borrow depending on age, the size of the mortgage required and whether it is a single or joint application.
Customers with the product will have the ability to take additional borrowing, port the mortgage if they move to a new property, or to make partial repayments of up to 10% a year. There are Early Repayment Charges (ERCs) that are stepped and reduce over the first 15 years of the mortgage term.
The new range will be distributed exclusively via Age Solutions, part of the Age Partnership Group. Advice is free of charge to the customer when they take a Nationwide Lifetime Mortgage product. The only additional cost to the applicant is the requirement to take independent legal advice.
Henry Jordan, Nationwide’s director of mortgages, said: “More people are living longer and many older people have significant wealth tied up in their property, with the over 55s holding as much as £1.8 trillion in their property. Nationwide has a long-term plan to increase choices for borrowers in this age group, who have not been well catered for by mainstream mortgage lenders and remain underserved by standard mortgage products.
“The new Nationwide Lifetime Mortgage will enable those with equity in their home to access their capital and use those funds flexibly to meet a range of needs.”
Nationwide has also indicated its support for moves by the Financial Conduct Authority (FCA) to consult on measures to further increase participation by mortgage lenders in this part of the market by easing regulatory restrictions to encourage the development of new products designed for older borrowers, including retirement interest only products.
Jordan added: “We welcome the FCA consultation on later life borrowing and we hope this will spark further innovation in this sector going forward.”