Saffron Building Society has launched a retirement interest-only (RIO) mortgage exclusively through Legal & General Mortgage Club.
There are two 3-year discounted rates, all for purchases and remortgages, with a minimum term of five years, no maximum term, 3% early repayment fee for three years, an arrangement fee of £999 and a minimum loan of £30,000.
There’s a 3.34% product up to 50% LTV which requires a Power of Attorney to be in place for the applicant and a 3.64% mortgage up to 50% LTV.
Anita Arch, head of mortgage sales at Saffron Building Society, said: “In an ongoing commitment Saffron continually looks to develop flexible ways to help homeowners plan their financial future. We proactively bring to market new products like the RIO mortgage to meet the demand.
“Retirement today looks and feels very different from how people viewed it in the past. Having asked brokers, many of their customers want to be able to enjoy travel, develop their home or help younger family members to buy a house of their own for instance.
“They want to be able to do this whilst protecting equity in their home. Utilising the capital linked to homeownership has become a popular way of financing people’s lifestyle in retirement. Our new RIO mortgage is a great way to do this.”
Danny Belton, head of lender relationships, Legal & General Mortgage Club, added: “Saffron Building Society sets the bar high for other lenders to follow suit.
“With a growing number of people borrowing into retirement, it is positive to see Saffron cater to the needs, hopes and dreams of today’s retirees, providing them with greater choice and flexibility.”
The mortgage allows borrowers to protect the equity in their home and/or release equity to support their lifestyle such as looking after family members, residential care or home improvements.
People with an interest-only mortgage, who have a repayment vehicle in place, can choose to use their capital for other purposes.
Borrowers with an interest-only mortgage, who do not have a repayment vehicle, can use this product to stay in their property for longer.