This mortgage comes with an interest rate of 5.59% which includes a 2.51% discount from our Standard Variable Rate for 5 years, followed by our Standard Variable Rate for the remainder of the term, currently 8.10%. The interest rate for this mortgage is ‘floored’, which means that while the rate may increase, it will never fall below 2.69% during the discount period.
What are the key features of this product?
This is a variable rate mortgage product which means monthly payments can go up or down during the term of the discount period. This is different to a fixed rate product. The rate of interest is linked to the Society’s Standard Variable Rate (SVR) for mortgages. During the first 5 years, the interest rate charged will be 2.51% below the Society’s SVR – this is the discount period and rate.
The lowest interest rate you might pay during this period will be 2.69% which is called the “floored” rate. This means that if the Society’s SVR is below 5.20% at any time during the period of the product, you will not benefit from the full rate of discount of 2.51%.
Three months before this product ends, we will contact you with the options available. If you do nothing at the end of the product period, you will move to the Society’s SVR which may mean your payments increase.
This product is available on:
An Interest-Only repayment basis. This means that your monthly repayments will only pay back the interest on your initial loan amount. The capital balance will not reduce.
This product is available for properties in England and Wales.
There is a £499 fee payable for setting up this mortgage.
This product is available for loans of at least £25,000 and up to £600,000.
This product requires all borrowers to be at least 55 at date of application.
This product has no maximum age for borrowers.
This product will not require a full repayment until either the property is permanently vacated or the date of death of the final surviving owner.
Who is this product designed for?
This product is designed for customers over the age of 55, not wanting a specific term on a residential mortgage, who:
are currently retired and drawing a pension or are intending to retire in the next 2-5 years.
are looking to purchase or remortgage a property.
have at least a 50% deposit/equity in their property.
have surplus monthly income to manage their finances if the Society’s SVR goes up which would mean an increase to the monthly repayment amount.
do not intend to make overpayments of more than 10% in any of the first 5 years.
Who is this product NOT intended for?
This product is not intended for customers who:
are not currently retired or planning to retire in the next 2-5 years.
want or need the certainty of a fixed monthly repayment for the term of the product.
want a Capital & Interest repayment type.
plan to repay more than 10% of the loan in any year within the first 5 years as this will result in a charge.
Does this product deliver "fair value" for customers?
Being a mutual building society, all our products are priced to balance the needs of our Member savers and borrowers and the Society’s operating costs to support the Society’s long-term future.
We support our mortgage customers by providing each applicant with a bespoke, personal, and individual approach. We largely deal with people whose circumstances do not fit into the standard requirements of automated decision-making processes used by larger lenders.
We believe this product represents fair value for the customers it was designed for considering the customer support provided before, during and after the application.
Initial Rate
5.59% which includes a 2.51% discount from our Standard Variable Rate for 5 years, followed by our Standard Variable Rate for the remainder of the term, currently 8.10%. The interest rate for this mortgage is ‘floored’, which means that while the rate may increase, it will never fall below 2.69% during the discount period.
Fee Details
£499 - This can be added to the loan on completion; however, this will result in interest being charged on it, making the overall fee greater over the term of the mortgage.
Maximum LTV
50%
Loan Size
Minimum £25,000 - Maximum £750,000
Mortgage Term
There is no mortgage term, and the mortgage would continue for as long as you permanently occupy the property. The mortgage would continue until the date of sale/repayment by you or the Executor of your Estate. It would only need to be repaid after a Repayment Event has occurred.
Age Restrictions
All borrowers to be at least 55 (at date of application)
No maximum age
Portability
This mortgage product is portable to a new residential mortgage on a different property when the new mortgage is taken out simultaneously with the repayment of the existing mortgage. You would need to meet our credit and affordability requirements for the new mortgage, the new property would need to be acceptable to us, and approval of a new mortgage would be subject to our prevailing Lending Policy.
Repayment Method
Interest-Only
Monthly payments of interest will be required for the period of the mortgage
Repayment Event
A Retirement Interest-Only Mortgage is provided on the basis that the Repayment Strategy for eventual repayment of the amount owing is the sale of the mortgaged property.
The ability to arrange a sale of the property and the repayment of the mortgage would remain within the control of the owner/borrower until a Repayment Event occurs.
This mortgage does not have a specified Mortgage Term or Repayment Date. We will only require full repayment within 6 months of a Repayment Event. A Repayment Event is defined as when:
- The property is permanently vacated, where this arises from both owners/borrowers or the final surviving owner/borrower (or the owner/borrower if it is in one name only) moving to reside in another property, or entering sheltered accommodation or long-term care
- The date of death of the final surviving owner/borrower (or the owner/borrower if it is in one name only)
Restrictions
Lending restricted to England and Wales.
Minimum property valuation £140,000.
Borrowers must be already retired and drawing their pension or are planning to retire within the next 2-5 years.
Early Repayment Charge Details
A full or partial capital repayment, which exceeds 10% of the capital balance amount in any one year during the discount period, will attract an early repayment charge of:
5% in the 1st year
4% in the 2nd year
3% in the 3rd year
2% in the 4th year
2% in the 5th year
This will not be charged if the sale of the property and repayment of the mortgage is related to the death of the borrower, or if a joint mortgage, the death of the final surviving borrower.
Representative Example
A mortgage of £53,711.00, payable over 25 years, on an interest-only repayment basis, with an initial payable rate of 5.59%, which includes a 2.51% discount from our Standard Variable Rate (SVR) for 5 years and then on our SVR, currently 8.10%, for the remaining 20 years. The initial term would require 60 monthly payments of £250.20, followed by 240 monthly payments of £362.55.
The total amount payable would be £156,939.00, made up of the loan amount (£53,711.00), plus interest (£102,024.00), Arrangement Fee (£499), Standard Valuation Fee (£285), Solicitor Fee (£250), Funds Transfer Fee (£15), and a Mortgage Exit Fee (£155).
The overall cost for comparison is 7.60% APRC.
This information may not be representative of your personal circumstances and your payments may differ from this. Representative data as of 1st January 2023.
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