The firm, which traditionally lends to equity release customers, is currently distributing the mortgage exclusively through Legal and General’s key partner accounts and has plans for wider distribution within a matter of weeks.
Customers up to the age of 85 can apply for the deal, while the product’s maximum term is available up to the age of 95 or the youngest borrower’s 95th birthday, if the loan is taken out by more than one person.
Rates start at 3.49% for a two-year fix and range to 3.95% for a five-year fixed deal. Hodge is also offering a two-year discount loan that comes at a variable rate of 3.30%.
Steve Cox, business development director for Hodge Lifetime, said: “We are delighted to be working with Legal and General mortgage club providing innovation to help customers in the later life lending market.
“We will be phasing further launches across the intermediary market place in the coming weeks and months.”
Jeremy Duncombe, director of Legal and General Mortgage Club, added: “It’s great to see innovation like this in the later life lending market and we’re really pleased to have been given exclusive access to the product.”
The interest-only deal is available as house purchase, remortgage or capital raising and comes with a maximum loan-to-value of 60% and £995 product fee. Hodge will allow loan sizes ranging from £20,000 to £500,000 and the loan can be secured on a property with a minimum value of £170,000 to a maximum of £1m. Properties over this amount may be accepted on referral.
Income considered in Hodge’s affordability assessment includes income from employment or self-employment; state, personal and company pensions, whether in payment or not; investment income and rental income.
Accepted repayment methods include sale of the home, sale of other property owned by the borrower, sale of investments and endowment maturity. Applicants are able to combine more than one of these to form their repayment strategy. An overpayment allowance of 10% is available during the introductory loan period.
Simon Collins, product technical manager at John Charcol, which will be gaining access to distribution of the deal shortly, also welcomed the announcement.
“A lot of lenders assume that most borrowers will retire at the age of 70, but if you’re working in a non-manual role then the likelihood that you’ll want to retire at a later date is plausible,” he said.
“The product is helping to bring more competition into the extremely underserved mature borrowers market. If the high street doesn’t want to lend to these customers then fine, but there’s a big market to be served there and this move by Hodge could encourage further innovation.”