Shawbrook Bank expands residential range with mortgage product for the over 55s

15 March 2017

New mortgage offers solution to borrowers who are nearing the end of their interest-only deals with an outstanding balance

Shawbrook Bank has this morning announced the launch of a new ’55 Plus Interest-Only Mortgage’. The new product is aimed exclusively at borrowers aged 55 or over who are nearing the end of their existing interest-only arrangement, but have an outstanding balance. The new product is available to brokers initially on an exclusive basis via specialist advisers Key Retirement Solutions.

The FCA estimates that 600,000 interest-only borrowers will see their mortgages mature before 2020. Of these customers, just under half are expected to have a shortfall, with around a third of these shortfalls expected to be over £50,000. This could be the result of a planned repayment vehicle not maturing as predicted, or perhaps a reliance on property price growth, which has slowed down over recent years. It is clear that product innovation is needed to address the expected interest-only ‘ticking time-bomb’.

Currently the options open to people over 55 reaching the end of an interest-only mortgage with a shortfall are limited as they are often restricted by their age; too old for further borrowing, but too young for equity release. Many of these people will either have to resort to selling and downsizing their cherished family home, or turn to savings or pension pots. This is despite the fact that many have good incomes and can continue to service a mortgage.

Shawbrook’s ’55 Plus Interest-Only Mortgage’ offers a solution. Customers can remain in their homes for up to an additional 15 years and leave their pension pots in place for longer. As well as this, customers applying for the mortgage can also raise additional funds for almost any purpose including; landscaping a garden, home improvements or helping a family member onto the property ladder. The ’55 Plus Interest-Only Mortgage’ differs from other mortgages whereby customers have full flexibility to make additional payments to their mortgage without penalty, or can repay their mortgage in full at any time (discharge fee £120 in England and Wales, £180 in Scotland).

The key features of the offering include:

Interest-only mortgages from £25,000 to £1 million (inclusive of fees)
5 to 15 year variable rates from 5.25%
3 & 5 year fixed rates from 5.50%
Maximum LTV offered: 50%
Age at mortgage inception of main earner: 55 - 75 years old
Maximum age at expiry of loan: 85 years old
Minimum income of main earner: £16,500 per annum
Minimum property value at inception: £225,000
Additional funds can also be raised for almost any purpose including; landscaping a garden, taking a once-in-a-lifetime holiday, helping children onto the property ladder or consolidating existing outgoings into one monthly repayment (a maximum of £30,000 can be raised for debt consolidation and this must be the first occasion whereby funds are being used for this purpose).

Maeve Ward, Managing Director, Residential Mortgages comments:

“For many, the prospect of selling a cherished family home when an interest-only deal is coming to an end is an emotional wrench, especially when the ability to continue paying a mortgage remains. We are thrilled to offer a lifeline to this underserved sector with Shawbrook’s new ’55 Plus Interest-Only Mortgage’. This new product not only provides peace of mind to those who do not want to sell their homes, or withdraw from their pensions, but also gives them the opportunity to borrow further to fund their future plans.

We are excited to partner with Key Retirement Solutions for the launch of this new mortgage. We are thrilled to be working together removing ‘age’ as a barrier, putting these valued customers’ needs first, and offering something currently not widely available from mainstream lenders”.

For more information please visit http://property.shawbrook.co.uk/fiftyfiveplus