The mortgage is charged at 4.54% with no fee and 4.34% with a £999 fee, with 10% overpayments being permitted each year.
Leeds Building Society will launch a 15-year fixed rate Retirement Interest-Only (RIO) mortgage on Tuesday 30 July – the first of its kind.
The mortgage is priced at 4.54% with no fee and 4.34% with a £999 fee, with 10% overpayments being permitted each year without a penalty.
Matt Bartle, Leeds Building Society’s director of products, said the past 12 months had exceeded performance expectations he and his team had set for what was an untested sector.
He added: “While Retirement Interest-Only was a completely new market, guidance from the regulator and our own extensive research led us to expect strong demand.
“Bearing in mind the UK’s demographic and the changes to how people are managing their financial commitments during later life, we anticipate the demand for Retirement Interest Only will carry on increasing as older borrowers seek greater choice, alongside more established options such as equity release and lifetime mortgages.
“The last 12 months bears this out and we’ll keep our product offering and lending criteria under review so we can support more borrowers wanting to make use of this type of home loan."
For the first three years there is a 6% early repayment charge, for the next five years a 5% charge, for the next three a 4% charge, the next two a 3% charge and the next two a 2% ERC.
The mortgage is available for customers aged 55-80 at application.
The top three reasons for applying for a RIO mortgage are to fund home improvements (39%), a like-for-like remortgage (22%) and debt consolidation (22%).
