Customers can repay up to 100% of the interest on the loan at either a variable or fixed interest rate, in the same way they would with a mainstream interest-only mortgage.
When fixing the rate, if interest rates increase above the agreed figure, any additional interest will be added to the original loan and paid back at the end of the term.
Research from the lender found that one in five people (19%) received money from parents or grandparents for a property purchase.
The average amount provided by family was £15,140 – approximately one third of the average first time buyer deposit of £46,000, according to ONS figures.
With equity release being a popular way to help fund a relative’s property purchase, lifetime mortgages could become another way to access funds.
“Obviously with variable interest rates there is the risk that the monthly payments may change in the future,” said OneFamily managing director Georgina Smith.
However, the mutual lender is also giving consumers the option to fix their maximum monthly interest payment, even if they have a variable interest rate.
Smith added: “We have included the option to make payments at a set percentage of the interest due or a set amount, and consumers can also choose to stop making the payments if their circumstances change. At this point they will have the choice to switch to one of our other lifetime mortgages.”
The new products include:
| Lump Sum Interest Payment Lifetime Mortgage – Variable Interest Rate | ||
| Lite LTV | Standard LTV | |
| Interest rate MER (current) | 3.50% | 3.70% |
| Interest rate AER (current) | 3.56% | 3.76% |
| Lump Sum Interest Payment Lifetime Mortgage – Fixed Interest Rate | ||
| Lite LTV | Standard LTV | |
| Interest rate MER (current) | 5.18% | 5.37% |
| Interest rate AER (current) | 5.30% | 5.50% |
