Shawbrook Bank has expanded its mortgage offering with the launch of a new ’55 plus’ interest-only mortgage.

The deal is exclusively for borrowers aged 55 or over who are nearing the end of their existing interest-only arrangement, but have an outstanding balance.

It is available to brokers initially on an exclusive basis via specialist advisers Key Retirement Solutions.

Shawbrook cited FCA estimates that 600,000 interest-only borrowers will see their mortgages mature before 2020. Of these customers, just under half are expected to have a shortfall, with around a third of these shortfalls expected to be over £50,000.

With the ’55 Plus Interest-Only Mortgage’, customers can remain in their homes for up to an additional 15 years and leave their pension pots in place for longer. As well as this, customers applying for the mortgage can also raise additional funds for almost any purpose including landscaping a garden, home improvements or helping a family member onto the property ladder. it can also be used for consolidating existing outgoings into one monthly repayment (a maximum of £30,000 can be raised for debt consolidation and this must be the first occasion whereby funds are being used for this purpose).

The ’55 Plus Interest-Only Mortgage’ differs from other mortgages whereby customers have full flexibility to make additional payments to their mortgage without penalty, or can repay their mortgage in full at any time (discharge fee £120 in England and Wales, £180 in Scotland).

It is available for loans from £25,000 to £1 million (inclusive of fees), with five to 15-year variable rates from 5.25% and three and five-year fixed rates from 5.50%. There is a maximum LTV of 50%.

The age at mortgage inception of the main earner is 55 – 75 years old, while the maximum age at the expiry of the loan is 85.

The minimum income of the main earner is £16,500 per annum and the minimum property value at inception is £225,000.

“For many, the prospect of selling a cherished family home when an interest-only deal is coming to an end is an emotional wrench, especially when the ability to continue paying a mortgage remains,” said Maeve Ward, managing director of residential mortgages at Shawbrook.

“We are thrilled to offer a lifeline to this underserved sector with Shawbrook’s new ’55 Plus Interest-Only Mortgage’. This new product not only provides peace of mind to those who do not want to sell their homes, or withdraw from their pensions, but also gives them the opportunity to borrow further to fund their future plans.

“We are excited to partner with Key Retirement Solutions for the launch of this new mortgage. We are thrilled to be working together removing ‘age’ as a barrier, putting these valued customers’ needs first, and offering something currently not widely available from mainstream lenders.”