The bank will now consider interest-only lending for borrowers who are already retired and want to use their pension income for affordability, as long as the customer is no older than 70 when the interest-only term ends.
For borrowers not using retirement income, applications for those who will be up to the age of 80 by the end of the term will be considered.
This is a change from its previous policy which did not permit interest-only mortgages to borrowers who were retired at the time of applying. Interest-only borrowing was also not available to clients if the term of the mortgage took them beyond their stated retirement age or the age of 70, whichever was sooner.
The lender will also consider joint interest-only applications, where one borrower is retired or plans to retire during the mortgage term, as long as the second borrower will not be retiring at any point in the term and can support the application’s affordability.
All interest-only borrowers will still need to have a suitable repayment vehicle to repay the capital on the mortgage at the end of the term.
Nicola Alvarez, senior manager for new propositions at Accord Mortgages, said: “We’re really pleased to be expanding our common sense lending criteria to better support those who have taken early retirement or who plan to retire during their mortgage term.
“These changes give borrowers greater flexibility to fulfil a better retirement thanks to lower monthly repayments and we’re sure brokers will welcome being able to offer more options to clients in this position.”
