The Interest Choice Plan will allow customers to pay interest while protecting the equity in their property and accessing additional funds.
Jon King managing director warned: “There is a potential mortgage time bomb ticking with pensioners paying home loans way past traditional retirement ages.”
More 2 Life research found 100,000 over 65s are spending a total of £1.36 billion a year on mortgage debt.
The equity release plan allows customers to choose the level of interest they pay on loans and the term, while fixing their interest rate and having access to a lifetime drawdown facility.
Customers can choose to pay all or part of the monthly interest in their loan and choose how much to withdraw. Those who do not take the loan-to-value can make further withdrawals.
The interest rate is 6.17% monthly and is fixed for life while interest payments are subject to a £25 minimum. Loan to values start from 20% at age 60 rising to 36% at age 75 and 45% at age 85 plus.
King added: ” Many customers want to pay interest in order to protect the equity in their home while others need to cut debts such as interest-only mortgages and others simply want the flexibility as they are working.
“The Interest Choice Plan helps expand the market by improving on previous plans which offered interest-paying options and offering increased flexibility on access to further funds.”
