The Equity Release Club and AIR Sourcing have signed a deal with Shawbrook Bank to distribute and advise on its 55-plus interest-only mortgages.
Equity release has been seen as a solution for borrowers on maturing interest-only mortgages for some time.
But products like Shawbrook’s provide them with the option of securing a residential mortgage as long as they have sufficient equity and fit criteria.
The interest-only mortgages are for borrowers aged 55-75 up to 50% loan-to-value with a maximum maturity age of 85, while they can take out 5 and 15-year variable rates from 5.25% as well as 3 and 5-year fixed rates from 5.5%.
Stuart Wilson, group managing director at Answers in Retirement Ltd, said: “Over the past few years there has been increasing talk about the ‘interest-only timebomb’ and what borrowers with such products would do as they came to the end of their terms if they still had capital shortfalls to pay off.
“It is innovative and forward-thinking lenders like Shawbrook that are developing the product solutions for these borrowers, and I’m sure advisers in the later life space will be keen to explore this offering in order to help such clients.”
The main earner taking out the mortgage must have a minimum income of £16,500, a minimum property value £225,000 and must be taking out a mortgage between £25,000 and £1m.
The customer can overpay the mortgage and it can be paid off in full for a £120 fee in England and Wales or a £180 fee in Scotland.
Maeve Ward, managing director, residential mortgages, at Shawbrook Bank, said: “I am delighted that the Equity Release Club has agreed to partner with Shawbrook Bank as one of our preferred partners on our new 55 plus interest-only mortgage product.
“Having been kindly invited to their Later Life Academy lending events I have been so impressed with the quality of the advisers and their appetite to explore new opportunities to assist with alternative customer outcomes.”