The Saffron Building Society has launched a Retirement Interest Only (RIO) Mortgage exclusively through Legal & General Mortgage Club.

It is for customers who are in retirement wanting to stay in their home for longer, or to unlock the value of their homes freeing up cash to enable wider lifestyle opportunities.

Details are as follows:

• 3-year discounted rates
•  3.34% ((SVR-2.3%) to 50% LTV – requires a Power of Attorney (POA) to be in place for applicant
• 3.64% (SVR-2.0%) to 50% LTV
• Arrangement fee: £999
• Early Repayment Fee: 3% for 3 years
• Overpayments: 20% penalty free per annum
• Loan: Min loan £30K, Max loan £1M
• Min Term: 5 Years
• Max Term: None
• Repayment: Interest only
• Purpose: Purchase or re-mortgage

The Saffron says its new RIO product will appeal to different market segments depending on their needs:

• The mortgage allows borrowers to protect the equity in their home and/or release equity to support their lifestyle such as looking after family members, residential care or home improvements.
• People with an interest only mortgage, who have a repayment vehicle in place, can choose to use their capital for other purposes.
• Borrowers with an interest only mortgage, who do not have a repayment vehicle, can use this product to stay in their property for longer.

Anita Arch, head of mortgage sales at Saffron Building Society, said: “In an ongoing commitment Saffron continually looks to develop flexible ways to help homeowners plan their financial future. We proactively bring to market new products like the RIO mortgage to meet the demand.

“Retirement today looks and feels very different from how people viewed it in the past. Having asked brokers, many of their customers want to be able to enjoy travel, develop their home or help younger family members to buy a house of their own for instance. They want to be able to do this whilst protecting equity in their home.

“Utilising the capital linked to homeownership has become a popular way of financing people’s lifestyle in retirement. Our new RIO mortgage is a great way to do this.”

Danny Belton, head of lender relationships for Legal & General Mortgage Club, added: “Saffron Building Society sets the bar high for other lenders to follow suit. With a growing number of people borrowing into retirement, it is positive to see Saffron cater to the needs, hopes and dreams of today’s retirees, providing them with greater choice and flexibility.”