Equity Release  

Nationwide enters equity release market

Nationwide enters equity release market

Nationwide has entered the equity release market in an exclusive deal with Age Solutions, part of Age Partnership.

As a result, the lender now claims it will become the only major high street lender to offer a product of this kind in the market. It is the building society's way of tapping into the fast-growing sector where homeowners over the age of 55 now have up to £1.8trn of property wealth, according to figures from the Equity Release Council (ERC).

The equity release offering is part of an ongoing plan to address the needs of a changing and ageing population and to design products to support people in or approaching retirement, Nationwide said.

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In summer 2016 Nationwide extended its borrowing in retirement options by raising the maximum age on maturity from 75 to 85 for retired applicants with a stable income. Now, the high street giant wants to build on this by enabling borrowers to unlock equity tied up in their property.

Borrowers who take the product will not need to make any repayments during their lifetime. When it comes to repaying the mortgage, interest will be added on the amount borrowed, with a rate fixed for the term of the mortgage.

The total rolled-up amount will then be repaid only at the end of the customer’s life or if they go into long-term care.

The product is available to both new customers and existing Nationwide members aged between 55 to 84. The fixed mortgage rates are divided into four tiers based on different amounts of loan-to-value (LTV) ratios, with interest rates starting from 3.8 per cent. Additionally, there are no product, valuation or advice fees.

Loans are available at up to 46 per cent 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.

Customers who take out the offering will also be able to take additional borrowing, transfer the mortgage if they move to a new property, or make partial repayments of up to 10 per cent a year.

Nationwide said advice is free of charge to the customer when they take the lifetime mortgage product. However, they will have to get independent legal advice.

As part of its entry into the equity release market, Nationwide has also joined the ERC.

The growth of the lifetime mortgage market prompted the Financial Conduct Authority (FCA) to consult on measures to increase participation by mortgage lenders – a move welcomed by Nationwide.

This included easing regulatory restrictions to encourage the development of new products designed for older borrowers, including retirement interest-only products.

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Henry Jordan, Nationwide’s director of mortgages, said: “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.