Vernon Building Society has launched two multi-use retirement mortgages, both of which have no age restrictions or arrangement fees.

The deals are available on both a repayment and interest-only basis.

The initial rates are 1.25% below its standard variable rate (SVR) of 4.7% (currently 3.45%) with a Lasting Power of Attorney (LPA), or 0.50% below the SVR (4.2% at present) without an LPA for the first five years.

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.

Vernon BS branch counter staff were obliged to pass the equity release qualification to advise on the product, launched last month and only independent qualified equity release advisers may advise on the range at this stage.
 
Alternative to equity release

Tom Gurrie, intermediary sales manager at the Vernon, said the products can be repaid through property sale 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”.

Gurrie said 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.”