Nationwide Building Society has become the first major high street lender to enter the equity release market.
The society is offering lifetime mortgage products priced between 3.8% and 4.8%, which are divided into four tiers based on loan-to-value.
Loans are available 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.
Nationwide’s lifetime products are available those aged between 55 and 84 and the range will be distributed exclusively via Age Solutions, part of the Age Partnership Group.
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 £1.8trillion 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.”
In line with the rest of the equity release market Nationwide’s lifetime mortgages have rolled up interest, with the loan being repaid when the customer dies or enters long-term care.
However customers have the option of taking on additional borrowing, as they can make partial payments of up to 10% per year.
There are early repayment charges that are stepped and reduce over the first 15 years of the mortgage term.
The society has also joined trade body the Equity Release Council.
Peter Vicary-Smith, chief executive of Which?, said: “For some people equity release could be an important plank in their financial strategy, so we’re delighted to see responsible players bringing new and fairer products to the market.
“As with any big financial decision, people should take professional advice and look at a range of options before making a choice.”
Nationwide also backed the Financial Conduct Authority’s consultation on reintroducing 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.”