The product allows borrowers to extend their interest-only loan by remortgaging to Shawbrook over a term of five to 15 years.
Its target borrower will be approaching the maturity of their existing interest-only mortgage and other than downsizing through the sale of property they have no other means of repaying the loan.
Maeve Ward (pictured), managing director residential mortgages, property finance, said: “The house is often the most cherished asset and so there will be a strong emotional connection to it. As such, while the customer could downsize via a sale it might not be the right time as they may help with family child care, for example.
“But in five to 15 years’ time when they are no longer needed for childcare it may well be a better moment to sell up.”
The range, which will evolve over time, will launch with rates starting from 5.25% with a choice of variable and fixed rates. The maximum loan-to-value is 50%, the products will have no early repayment charges and borrowers will have the ability to overpay free of charge. Borrowers must have a clean credit profile. Shawbrook will allow capital raising outside of the mortgage loan for home improvements, consolidation and assisting family members onto the property ladder
The product will be distributed solely through Key Retirement in January and will be rolled out gradually and controlled from February onwards. It can only be offered by advisers holding an equity release qualification to ensure that all the customers’ circumstances are considered.
Ward added: “We have completed several roadshows over the last six months and the product has been well received. It’s another option in a very small market of lenders providing a breath of fresh air for customers who may be starting to panic.”