Interest-only mortgages to last into retirementaunched by building society
Older home-owners are being given more borrowing options, as a building society launches a new range of retirement interest-only mortgages.
Leeds Building Society said it is entering the market, with the new deals initially being made available through brokers.
Interest-only mortgages allow people to make regular interest payments on a loan, without paying off the loan itself - but the capital must be eventually paid off.
Leeds’ new mortgages are being offered to borrowers aged 55 to 80.
The loans need to be repaid on a specified life event. This could be the sale of the property, moving into residential care - or the death of the borrower.
Borrowers will need to demonstrate that interest-only repayments are affordable throughout the term of the loan.
Leeds is offering three deals at fixed rates for two, three or five years.
The loans carry product fees of £999 and have rates of 3.34% for the two-year deal, 3.49% fixed for three years and 3.74% fixed for five years.
For borrowers who are able to pay off some of the capital during the initial period of the loan, there is some scope to do this - 10% capital repayments are allowed each year during the fixed-rate periods without incurring an early repayment charge. The maximum loan-to-value (LTV) on the deals is 55%.