Stockport’s Vernon Building Society has launched four products to its retirement mortgage range, including an offset retirement mortgage.
This allows RIO borrowers to reduce their borrowing if they hold funds in an offset savings account with the society.
Ian Keeling, director of sales and marketing at Vernon, said: “Our customers are looking for new opportunities to safely release cash from their homes and seeking more flexibility from lenders.
“We were one of the first lenders to identify the needs of older borrowers by launching our retirement mortgage range in 2015. As an innovative and agile mutual business, we’re now delighted to expand the choices available to them.
“Our offset account allows borrowers to have certainty of instant access to a larger sum of money should they need it, without incurring interest until they use it.
“Of course, advice is essential, either through a regulated mortgage broker or directly through our experienced advisers. Borrowing in later life is a big decision but we are committed to giving customers greater control and choice over their finances.”
For example, if a borrower takes a £50,000 retirement mortgage, but only wants to access £20,000 of that money immediately, they can put the remaining £30,000 into their offset savings account where it will be offset against their mortgage, meaning interest would only be incurred on the £20,000 balance.
The offset savings account is set up on an instant-access basis, so the borrower can withdraw money as and when they need it.
As they spend money from their offset savings account the amount offset against their mortgage will reduce, therefore an increased loan balance will then incur interest. If their circumstances change they can also add to their own savings, making it flexible.
The mortgage is underwritten and assessed for affordability based upon the full amount applied for at outset.
The rates in the retirement mortgage range start from 3.49%, and the lender gives borrowers the ability to choose between fees or fee-free, with or without a Lasting Power of Attorney and with or without an offset facility.