Interest-only mortgage introduced for downsizing

November 22, 2015 by Brendan O'Neill

Lenders

Older borrowers who are considering downsizing may be able to take out an interest-only mortgage, thanks to a new product launched by the Mansfield Building Society.

The new mortgage is available to retirees up to the age of 80 years old, although they will have to fulfil strict criteria. Borrowers must have at least £150,000 equity available in their property, while there must also be reasonable properties available for this amount in the local area.

The mortgage may be taken out for up to 40% Loan to Value, and will have interest charged at 3.19%. The product attracts fees of £800 completion fee and £199 application fee. The mortgage can be taken out to either remortgage a property or to purchase a new property.

There’s an existing product available at the Mansfield Building Society, which permits borrowers up to the age of 80 to have a mortgage on a capital repayment basis. The building society also has an interest-only mortgage, which is available to those with a solid repayment strategy. According to the building society, the new mortgage product has been introduced as a possible solution rather than equity release. Stuart Bryce, the business development manager for Mansfield Building Society, said that the new product is only available through an intermediary, as the lender needs to know all the financial circumstances of the client, including plans for the future.

This product may suit the requirements of a number of older borrowers. CeMAP trained mortgage advisers are able to discuss the possibility of being accepted for the new mortgage.