Equity release provider Hodge Lifetime has launched an interest-only lifetime mortgage to fill the space between a traditional residential mortgage and existing equity release lifetime mortgages.
The Retirement Mortgage aims to provide an alternative for borrowing into retirement for borrowers who have a “reasonable level” of pension income.
Because the product is interest-only, the loan capital only needs to be repaid after the borrower dies or moves permanently into long-term care.
However, the loan may be repaid after five years without incurring an early repayment charge. Borrowers also have the option to roll-up interest once they turn 80, coupled with a no negative equity guarantee.
Deian Jones, managing director of Hodge Lifetime, said: “The current range of equity release products caters very nicely for the asset rich, cash poor customer. For those fortunate enough to be entering retirement with decent pension provision, the Retirement Mortgage offers a credible and flexible alternative to the more traditional equity release plan.”
Jon Tweed, sales director at Hodge Lifetime, said: “Borrowers who intend to downsize later in life, or those whose personal circumstances are likely to change, may not feel that traditional equity release products are a viable option.”
Last week, the Financial Conduct Authority warned against companies taking advantage of customers unable to repay interest-only loans by shoehorning them into more expensive products such as equity release.