New era of retirement mortgages on the horizon

OLDER homeowners are set to benefit from a new wave of retirement mortgages, as a Treasury minster has said there is “considerable merit” in helping the elderly to keep their homes.

Nationwide yesterday became the first major lender to announce an “interest-only” retirement mortgage, which allows homeowners to keep borrowing until they die.

Unlike repayment mortgages, which see homeowners build up equity, interest-only plans only require interest on the loan to be paid, letting homeowners maintain existing equity.

Experts said they anticipated a new era of interestonly retirement mortgages following a relaxation of City watchdog rules.

John Glen, the economic secretary to the Treasury, signalled support for the idea yesterday after telling MPS several lenders are looking “very seriously” at introducing similar mortgages.

Details of Nationwide’s new mortgage are expected later this year.