Nationwide is first major lender to offer an equity release lifetime mortgage

Nationwide is entering the equity release space with the launch of a Lifetime Mortgage product for borrowers aged between 55 and 84.

It is the only major, high street mortgage lender to offer a product of this kind in the equity release market.

Santander offers a referral service for its customers aged over 60 with a maturing interest-only mortgage who may wish to consider changing to an equity release product. It has partnered with Legal & General Home Finance who supply the equity release mortgage.

The move by Nationwide is part of an ongoing plan  to address the needs of a changing and ageing population, and design products to support people in or approaching retirement.

In summer 2016 Nationwide extended its borrowing in retirement options by raising the maximum age on maturity of a mortgage from 75 to 85 for retired applicants with a stable income.

Building on this, the Nationwide Lifetime Mortgage aims to help a broader range of customers wishing to borrow in later life so that they can unlock the often-substantial equity tied up in their property.

Nationwide’s Lifetime Mortgage does not require any repayments during the customer’s lifetime. Interest is added to the sum borrowed, with a rate fixed for the term of the mortgage, and the total rolled-up amount is repaid only at the end of the customer’s life or if they go into long term care.

The fixed mortgage rates are competitive, divided into four tiers based on different amounts of loan to value (LTV) starting from 3.8 and going up to 4.8% for someone requiring a higher LTV.

There are no product, valuation or advice fees and you can borrow up to 46% of what your homes is valued at, i.e. 46% LTV.

How much you can borrow depends on age, the size of the mortgage required and whether it is a single or joint application.

As the Nationwide Lifetime Mortgage is flexible, customers may be able to take additional borrowing and they can port the mortgage if they move to a new property. It is alos possible to make partial repayments of up to 10% a year, which means you will have less to payback when you eventually sell the property, when you either to go into long-term care or pass away.

If you want to back out of the mortgage during the first 15 years there are Early Repayment Charges (ERCs) that are stepped and reduce over time.

The new range will be distributed exclusively via Age Solutions, part of the Age Partnership Group and an experienced provider in the sector. Advice is free of charge to the customer when they take a Nationwide Lifetime Mortgage product. The only additional cost to the applicant is the requirement to take independent legal advice.

Henry Jordan, Nationwide’s director of mortgages, commented: “More people are living longer and many older people have significant wealth tied up in their property, with the over 55s holding as much as £1.8trillion in their property.

“Nationwide has a long-term plan to increase choices for borrowers in this age group, who have not been well catered for by mainstream mortgage lenders and remain underserved by standard mortgage products.

“The new Nationwide Lifetime Mortgage will enable those with equity in their home to access their capital and use those funds flexibly to meet a range of needs.”

Peter Vicary-Smith, chief executive of Which?, said: “For some people equity release could be an important plank in their financial strategy, so we’re delighted to see responsible players bringing new and fairer products to the market.

“As with any big financial decision, people should take professional advice and look at a range of options before making a choice.”

As part of its entry into the equity release market, Nationwide has also joined the Equity Release Council.