In order to meet the needs of older borrowers who are either looking to release equity or move home, Bath Building Society has launched a retirement mortgage.
During the term of the mortgage the borrower is responsible for meeting the monthly payments which will be on an interest-only basis. This means that only the interest on the amount of money borrowed is paid each month.
The actual amount borrowed will be repaid from the sale of the home when the customer (or, for joint mortgages, each customer) dies or moves into sheltered accommodation or residential care, or to live with a family member in another property.
The minimum age is 65, and borrowers must have a source of income; typically from a pension so that interest payments are affordable for the term of the mortgage which may be up to a person’s full lifetime.
Bath will lend a minimum of £50,000 up to a maximum of £200,000. The amount borrowed will depend upon the customer’s needs and ability to repay the interest each month.
Up to 25% of the property’s value can be lent, and homes must be located in the following areas – Bath, Bristol, Dorset, Gloucestershire, Hampshire, Oxfordshire, Somerset or Wiltshire area.
Dick Jenkins, chief executive of Bath Building Society, said: “Bath Building Society has long been a champion of older borrowers, but this product further demonstrates that we are open for business to later life borrowing.
“There is a definite and increasing need for older people to have the flexibility to borrow to meet their needs, in much the same way that younger people do.
“We know that many older borrowers want to preserve the equity in their homes as an inheritance for their children and where they can meet the cost of borrowing from their pensions and incomes, why should they not have the opportunity to do so?
“As we all are living longer and are more active in our later years we need to reflect that in the mortgages we offer. The traditional mortgage model in which you have to pay off your mortgage at the point you retire and are excluded from the market thereafter seems now to belong to a bygone age.
“And people no longer conform to a stereotype of old age, if indeed they ever did; retired people have dreams too and we want to help finance them.”
