Beverley Building Society has launched a retirement interest only mortgage at 55 per cent loan to value for borrowers aged 55 years and above.
The three year discounted variable product has an interest rate of 2.99 per cent, representing a 2 per cent discount on the Society’s 4.99 per cent standard variable rate.
The RIO mortgage has a product fee of £495 for applicants with a lasting power of attorney in place, or £795 for those without.
Borrowers can access a minimum of £25,000 for a purchase or £40,000 for a remortgage, up to a maximum of £350,000. The minimum property value is £125,000.
Graham Carter, head of lending at the Beverley, said: "RIO is a natural extension to our existing later life lending offering, which is proving to be very popular given current market demand from older borrowers.
"Since the introduction of the new pension freedoms, we think our RIO mortgage offers people an affordable way of unlocking some equity from their home without interest rolling up and increasing the capital debt over the term of the loan.
"It’s a cost-effective way of accessing cash which can be used to either top up retirement income, gift a deposit to a younger family member as part of their legacy planning, raise capital for a specific purchase or simply having a nest egg of cash for that rainy day."
Scott Gallacher, chartered financial planner at Rowley Turton, said: "I'm cautious on borrowing money for gifting purposes but no doubt it would be a help to those people who are asset rich but cash poor."