Hodge launches interest-only retirement product

Hodge launches interest-only retirement product

Hodge Lifetime has launched a residential interest-online mortgage for older borrowers in response to recent rule changes.

The interest-only loan for the over-55s has no end date or term length and allows them to stay in their home and keep borrowing until they die.

Hodge said the product was created in response to the Financial Conduct Authority’s relaxation of rules on lending to older borrowers.

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Customers with reliable pre- and post-retirement income will be able to keep borrowing until they die or go into care.

Hodge said the product could suit the millions of homeowners coming to the end of their interest-only mortgage term without a repayment vehicle in place.

Steve Cox, business development director at Hodge Lifetime, said: "Millions of homeowners have, until now, had to jump through hoops to get a mortgage later in life, making what many of us take for granted a huge financial and emotional stress.

"It’s never been more important that borrowers have flexibility and choice when it comes to something they hold dear – their home."

It is estimated more than 20 per cent of the UK population will be aged 65 or older within the next decade, and mortgage providers are starting to react to the changing environment.

Hodge Lifetime offers a five-year fixed deal at 3.99 per cent on loans up to £500,000, a two-year fix at 3.59 per cent and a two-year variable option at 3.44 per cent. All are available with a loan-to-value of up to 60 per cent on properties worth a minimum of £100,000 and have a product fee of £995.

After the deal period interest rates revert to the standard variable rate of 4.45 per cent. Borrowers can overpay up to 10 per cent a year with no charge.

In March the FCA announced plans to remove a regulatory barrier to allow ‘retirement interest-only mortgages’ for older consumers, in which the loan would only be repaid on a specified life event such as the customer’s death or move into residential care.

Last week Nationwide revealed in its annual results that it is looking to launch a retirement product. It said: "Member needs change in later life so we have expanded our mortgage range with a lifetime mortgage which will allow people to access equity in their home in later life.

"Next, we plan to launch a retirement interest-only mortgage giving members more choice in managing their finances as they get older."