Legal & General Home Finance has signed a deal to supply equity release loans to The Co-operative Bank’s ageing interest-only customers.
The five-year deal will see lifetime mortgages be marketed as another option to help Co-op borrowers with problems paying off their interest-only balance.
They will also be promoted as helping those unable to keep up with mortgage repayments in retirement.
If Co-op customers choose a lifetime mortgage then they no longer have to pay any monthly interest.
The Co-operative Bank’s customers will be offered advice by The Retirement Lending Advisers, part of Key Retirement Solutions.
TRLA can only give advice on Legal & General lifetime mortgages.
If Legal & General products are not suitable, the customer will instead be referred to Key Retirement Solutions whole-of-market advisers.
Co-op interest-only customers will not pay advice fees. Those that do take out a lifetime mortgage will not pay any valuation or arrangement fees.
The deal is the second L&G has secured, having announced one with Santander last year.
Experts expected a flood of similar deals, but none happened until today.
Legal & General Home Finance managing director Steve Ellis says: “We were incredibly proud to be the first lender to secure an agreement of this type, but we always intended to launch further partnerships like this to enable more people to benefit from the positive impact releasing equity can have on retirement.
“There are still a significant number of borrowers who have not set aside the necessary funds to repay the outstanding capital once their interest-only mortgage matures, and a lifetime mortgage could be one solution for these individuals.”
The Co-operative Bank UK director of products and communications Matthew Carter says: “We look forward to working with Legal & General Home Finance to help more of our customers create a better, more secure, retirement, through increasingly effective ways of managing their finances in later life.”