The Mansfield Building Society has launched an interest-only mortgage aimed at retirees who are downsizing.
The product, available exclusively through brokers, can be taken out up to age 80 where the repayment strategy is downsizing.
To qualify for the downsizing option there must be a minimum equity of £150,000 in the property and this must be sufficient to purchase a “reasonable quality home” in the local area.
The mortgage is available up to 40 per cent LTV at a rate of 3.19 per cent. It has an application fee of £199 and completion fee of £800, and is available for purchase or remortgage.
The Mansfield has an existing product that allows a mortgage term up to age 80 on a capital repayment basis, or on an interest only basis with a mainstream repayment strategy.
The building society says its new product is an alternative to equity release.
The Mansfield business development manager Stuart Bryce says: “I am confident that advisers will see this as an attractive option to meet the clear needs of an underserved segment of the mortgage market. It is only available through intermediaries because it requires a full understanding of a client’s current and future circumstances, including their plans for later life.
“With the spotlight very much on different strategies to help clients steer the right financial course at a significant point in their lives, the Mansfield is proud to offer a common sense alternative.”
It comes after the FCA urged lenders to develop products to better suit the changing needs of older borrowers earlier this week.