Nationwide extends choice for older borrowers with new lifetime mortgage

17 November 2017

From Friday 17 November, Nationwide Building Society is launching its Lifetime Mortgage product, expanding choice for those looking to borrow later in life.

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

It is part of an ongoing plan by Nationwide to address the needs of a changing and ageing population, and design products to support people in or approaching retirement. Those over 55 have up to £1.8trillion of property wealth and the launch of the Nationwide Lifetime Mortgage aims to help those looking to access those funds.

In summer 2016 Nationwide extended its borrowing in retirement options by raising the maximum age on maturity 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.

It is available to both new customers and existing Nationwide members aged between 55 to 84. The fixed mortgage rates are competitive, divided into four tiers based on different amounts of loan to value (LTV) and starting from 3.80%.

In addition to competitive rates, there are no product, valuation or advice fees to the customer taking the Lifetime Mortgage product, giving the range the lowest overall costs in the market. Loans are available at up to 46 per cent LTV, with the amount available to borrow depending 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 with the product will have the ability to take additional borrowing, port the mortgage if they move to a new property, or to make partial repayments of up to 10 per cent a year. There are Early Repayment Charges (ERCs) that are stepped and reduce over the first 15 years of the mortgage term.

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, said: “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.”

Nationwide has also indicated its support for moves by the Financial Conduct Authority (FCA) to consult on measures to further increase participation by mortgage lenders in this part of the market by easing regulatory restrictions to encourage the development of new products designed for older borrowers, including retirement interest only products.

Henry Jordan continued: “We welcome the FCA consultation on later life borrowing and we hope this will spark further innovation in this sector going forward.”

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.

Notes to editors:

Rates for the Nationwide Lifetime Mortgage are lifetime fixed rate products and are subject to review. They are currently banded as follows:

Very Low LTV 3.80%
Low LTV 3.90%
Mid LTV 4.25%
High LTV 4.80%

Applications can be made from the age of 55 up to the age of 84
It is available in England, Wales and Scotland.
The minimum to maximum property price is £100,000 to £1,000,000.
Minimum to maximum loan size: £10,000 to £460,000
There are no upfront advice fees for the customer payable to Age Solutions if they complete on the Nationwide Lifetime Mortgage. Independent legal advice is required for all applicants.
The Nationwide Lifetime Mortgage Product is repayable only upon death or if the borrower goes into long term care.
Partial repayments of up to 10 per cent per annum can be made.
Early penalties: 6% for 0-60 months, 3% for 61-120 months, 1% ERC 121-180 months, 181 months+ No ERC. Customers may be exempt from ERCs when, after 5 years, they choose to downsize to a property of lesser value which is outside of Lending Criteria and therefore ineligible for porting
The product will be offered exclusively through Age Solutions, part of Age Partnership Group. Lending is available to both single and joint applicants.
Borrowers can apply for additional borrowing 6 months after their initial loan completes (min loan £10k)

About Nationwide

Nationwide is the world's largest building society as well as one of the largest savings providers and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million customers.

Customers can manage their finances in a branch, via the mobile app, on the telephone, internet and post. The Society has around 18,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

Please note: If you are a customer looking for information on our products and services, please visit the main website.