Marsden launches retirement interest-only mortgage

Marsden launches retirement interest-only mortgage

Marsden Building Society has added a retirement interest-only mortgage to its Older Borrower range.

The product will be available to borrowers over the age of 55 for purchase or remortgage, up to a loan value of £750,000.

The Marsden is launching the retirement interest-only mortgage with a three-year fixed rate of 3.49 per cent up to 50 per cent loan-to-value.

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Steve Robinson, head of lending at Marsden Building Society, said the product was a "strong addition" to the society’s lending solutions.  

He said: "The range differs slightly from our existing Older Borrower range as each borrower must demonstrate affordability and the sole option for repayment is triggered by a life event which sees the sale of property being the repayment solution.

"We’ve created another section on our website for the retirement interest only product and developed tailored toolkits including criteria and product portfolios so that brokers have access to everything they need."

Will Hale, chief executive at equity release adviser Key, said Marsden's launch was a welcome addition to the range of retirement interest-only mortgage options for advisers to choose from. 

He said: "Expanding their Older Borrower range is a smart move at a time when the market for these products is growing significantly and will allow them to help a more diverse range of customers – potentially including those they may have turned away in the past." 

But Mr Hale said his experience suggested many borrowers for whom these products were aimed may struggle to pass the affordability criteria.

He said: "Furthermore, with interest rates predicted to rise, other customers may well be concerned about what they would do at the end of the three-year fix and instead favour products with lifetime fixed rates and the added protections of guarantee of tenure and a no negative equity protections. 

"We firmly believe that older borrowers considering these types of solutions require specialist advice which not only looks at retirement interest-only but equity release and other later life lending options."

In March 2018, the Financial Conduct Authority reviewed its approach to later life lending removing a regulatory barrier to allow retirement interest-only mortgages for older customers.

The regulator now recognises retirement interest-only products as standard mortgages rather than assessing them under more stringent equity release standards. 

Since then a handful of lenders have begun to introduce the product, including Leeds Building Society, Buckinghamshire Building Society and Scottish Building Society.