The Vernon’s two new retirement mortgages have initial rates of 1.25% and 0.50% below the standard variable rate for the first five years with no arrangement fees.
There are no age restrictions or maximum term, and the mortgages can be on either repayment or interest-only terms.
Tom Gurrie, Intermediary Sales Manager at the Vernon, said:
“Our retirement mortgages are aimed to meet the unique needs of older borrowers that are either looking to release equity, remortgage or move home.
“If necessary, the amount borrowed can be paid back from the sale of the property when the borrower dies or moves into alternative accommodation such as long-term care.
“These products provide an alternative to a more traditional equity-release mortgage, with no roll-up of interest and no increase in the mortgage debt.
“We are seeing more applicants coming to the end of an interest-only mortgage in their later years who have no means to repay the outstanding debt demanded by their lender and therefore need to re-schedule their loan.
“At the moment, the products are only available to brokers with an equity-release qualification, so we welcome the recent announcement by the FCA to review the rules on advice when discussing retirement interest-only mortgages”.
The lower-interest product at 1.25% below SVR is dependent on a lasting power of attorney (LPA) agreement being in place.
“When elderly borrowers are considering taking on a mortgage, it makes sense to involve the wider family in that discussion, particularly where the intention is to leave the mortgaged property to children or other family members.
“An LPA is becoming increasingly used to allow money issues, bank accounts etc to be easily dealt with by a trusted family member where a person becomes infirm or loses mental capacity.”
The Vernon first launched its retirement product in 2015, becoming the first and only lender to offer a discounted mortgage rate to older couples who register a Lasting Power of Attorney.
“LPAs save a great deal of time, worry and money for loved ones as sorting out the finances of someone who has lost mental capacity without one is a long and costly process” adds Tom.