Bath Building Society has launched an interest-only ‘retirement mortgage’ for those looking to release equity or move home.
The mortgage has a maximum loan-to-value of 25% and is designed to be repaid from the sale of the home, when the homeowner moves into sheltered accommodation or when they start living with a family member or in another property.
To qualify applicants must be in Bath, Bristol, Dorset, Gloucestershire, Hampshire, Oxfordshire, Somerset or Wiltshire.
Dick Jenkins, chief executive of the society, said: “There is a definite and increasing need for older people to have the flexibility to borrow to meet their needs, in much the same way that younger people do.
“We know that many older borrowers want to preserve the equity in their homes as an inheritance for their children and where they can meet the cost of borrowing from their pensions and incomes, why should they not have the opportunity to do so?
“As we all are living longer and are more active in our later years we need to reflect that in the mortgages we offer.
“The traditional mortgage model in which you have to pay off your mortgage at the point you retire and are excluded from the market thereafter seems now to belong to a bygone age.
“And people no longer conform to a stereotype of old age, if indeed they ever did; retired people have dreams too and we want to help finance them.”
Applicants must be at least 65 and have a source of income, typically from a pension.
Bath will lend between £50,000 and £200,000.