The product is being offered to customers over the age of 55 and in receipt of retirement income, alongside the society’s equity release mortgage.
Borrowers offered the deal are looking to complete a term extension, a change in repayment, or a rate switch with a term extension or repayment method change, the lender added.
Dedicated Nationwide specialist mortgage consultants are handling the mortgages.
Earlier this year, the Financial Conduct Authority (FCA) reclassified retirement interest-only from a lifetime to a mainstream mortgage.
Henry Jordan, director of mortgages, said: “Nationwide remains committed to our ongoing plan to address the needs of a changing and ageing population in later life, and to evolve and initiate products to support people in or approaching retirement.
“We are pleased that the FCA has acted to amend mortgage regulation to allow the development of retirement interest-only products, which supports our aspiration to bring increased innovation in this area.”
Gross mortgage lending and remortgages at Nationwide increases
The interest-only pilot was announced as Nationwide reported its gross mortgage lending increased to £17.3bn in the first half of the financial year to the end of September.
One in five first-time buyers took out a mortgage with the lender during the period, working out at a record 40,500.
However, the society cited “intense competition” in the mortgage market for pressure on margins, although it managed to maintain its share of market at 13%.
Investment in technology and asset write-offs worth £135m, pushed overall profit at the society down 17% to £516m in the first half of the year, from £628m a year earlier.
The lender said it had made it easier and quicker for customers to remortgage online.
More than £10bn worth of prime mortgage customer balances switched to a new Nationwide product in the period, up from £8.7bn a year earlier.
Nationwide’s enhanced buy-to-let proposition over the period helped to increase gross landlord lending to £2.1bn, from £1.7bn in the same period last year.
Mortgage accounts more than three months in arrears at the group were flat, while the average loan to value remained at 56%.
Joe Garner, chief executive at Nationwide Building Society, said the last six months had seen continued strong growth.
“The strength of our business means we are well placed to invest confidently in the future of the society, and we have committed to invest an additional £1.3bn over the next five years to transform our technology estate and capabilities.
“This will take our total investment over the next five years to £4.1bn and will ensure the society makes the most of the opportunities ahead.
“We will develop new propositions, further enhance our service, simplify our operations and build new skills for the future.”