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Nationwide boosts access to later life lending products

By Vicky Shaw, PA Personal Finance Correspondent

Britain’s biggest building society is boosting access to its later life lending products aimed at over-55s.

Nationwide Building Society previously launched a range of mortgage options supporting those in and approaching retirement to its existing mortgage members.

Now, the products are also being made more widely available to borrowers who are not already Nationwide customers.

Borrowers will need to apply before their 85th birthday – or their 95th birthday if they are an existing mortgage member. For some people, their debt will only be paid off when they die.

Alongside Nationwide’s standard mortgage lending options, the Society offers a retirement capital and interest mortgage (RCI), a retirement interest-only (RIO) product and a Nationwide lifetime mortgage for older borrowers.

Borrowers taking out the RCI deal must also have a pension income and the maximum loan-to-value (LTV) is 50%.

Similar restrictions also apply for the RIO deal.

With a RIO mortgage and a lifetime mortgage, the loan is usually eventually repaid by the sale of the property after the borrower has died or moved into long-term care.

People considering later life borrowing may want to consider whether they will still have as much of an inheritance to pass on as they would have liked. They may also want to discuss their plans with other family members.

Nationwide said people can take out these loans for various reasons – including debt consolidation, gifting to family members, holidays or home improvements.

There are no product, valuation or advice fees for the Nationwide’s later life products, the Society said.

Rates for the RIO deal start from 2.74% for tracker products, while fixed rates start at 2.99%.

Rates for retirement capital and interest products are aligned to RIO rates, Nationwide said.

The lifetime mortgage offers a fixed rate for life and these start at 3.41%, with £1,000 cashback that could be used towards independent legal advice costs.

Trade association UK Finance recently said increased demand for later life borrowing meant there was strong growth in lending by equity release firms and other specialist mortgage lenders last year.

In a blog on its website, it said gross mortgage lending totalled £268 billion last year, up 3% on 2017.

Patterns of borrower incomes have become more complicated, UK Finance said, partly driven by a growth in people being self-employed as well as an ageing population with more people working for longer.

Rachel Springall, a finance expert at Moneyfacts.co.uk, said: “The Nationwide’s decision to allow both members and non-members to apply for their later life range is an exciting move in response to the growing demand for these type of products.”

She continued: “The products on offer through Nationwide have been carefully priced to sit comfortably in the market and with such a prominent brand backing these type of deals, hopefully this will inspire other well-known brands to consider competing in this market.”

She said RIO the mortgage market “is still relatively niche”, with building societies driving the competition.

Ms Springall said that while RIO mortgages may be a good option for some people, they may also pose issues for any relatives such as the impact on inheritance, “so they must be considered carefully”.

Jason Hurwood, Nationwide’s director of home propositions, said: “This move is in direct response to growing demand for choices in later life, which is why we are now extending our later life package of products and advice to both members and non-members.”