Nationwide revamps its later life lending options

Britain’s biggest building society is revamping its options for older borrowers – and for some their debt will only be repaid when they die.

Nationwide Building Society said the move is aimed at addressing the needs of an ageing population by “bridging the gap in the market for later life borrowing options”.

Its later life mortgage products and dedicated advice are aimed at those aged 55 and above and people can apply up to the age of 85.

Alongside Nationwide’s standard mortgage deals, the society is offering three later life lending options.

These are a retirement capital and interest repayment mortgage, a retirement interest-only product, and a Nationwide lifetime mortgage for older borrowers.

Products will initially be available to existing Nationwide mortgage members, with plans to roll out the later life mortgage products more widely by summer 2019.

Borrowers must be in receipt of a pension to take out the capital and interest repayment or interest-only deals, which have a maximum loan-to-value (LTV) of 50%.

With the retirement interest-only and lifetime mortgage deals, the loan may be repaid by the sale of the property after borrowers have moved into long-term care or when they die.

The lifetime mortgage is an equity release product and, as with the other two types of later life borrowing deal, money can be borrowed for several reasons including home improvements and holidays.

Nationwide said its move into the retirement interest-only market follows Financial Conduct Authority (FCA) mortgage rule changes last year. It said rates start from 2.74% for tracker products with no fees, while fixed-rates start from 2.99%.

Rates for retirement capital and interest mortgages start at 1.89%. The lifetime mortgage offers fixed-rate products and these start at 3.49%.

In 2016, Nationwide increased its maximum age for those borrowing in retirement from 75 to 85.

It said the latest move brings its later life deals together as a suite of products.

Jason Hurwood, Nationwide’s director of home propositions, said: “We have an ongoing plan to address the needs of a changing and ageing population, and to design products to support people in or approaching retirement.”

Rachel Springall, a finance expert at Moneyfacts.co.uk, said: “It’s fantastic to see such a well-respected high-street brand stepping up to offer a solution to older borrowers who feel they have nowhere to turn.

“People are living longer but they may not have enough pension provisions to fund a longer retirement, so it is inevitable that they will need to secure a way to fund their later life.”

Ms Springall said there are still few options generally in terms of retirement interest-only mortgage deals.

She said other lenders with competitively-priced retirement interest-only deals include Leeds Building Society and Hodge Lifetime.

Ms Springall said that in recent years other lenders have also been extending their maximum ages to accommodate older borrowers.

She added “The equity release market is also booming with over 200 options available to choose from and more individuals are turning to a lifetime mortgage to fund their later life.”