Vernon launches Offset Retirement Mortgages and lower rates

03 April 2019

A flexible new way to borrow in later life

Innovative OFFSET RIO mortgage - Later life borrowers can release additional equity and only incur interest on the amount they borrow
Lower interest rates on new RIOs – The new deals start from just 3.49%
More choice - Borrowers can choose between fee-free and fee-paying, with or without Lasting Power of Attorney and with or without offset.

Stockport’s Vernon Building Society has added four new products to its Retirement Mortgage range, including highly innovative offset deals.

The rates in the new Retirement Mortgage range start from 3.49%, and the lender gives borrowers the ability to choose between fees or fee-free, with or without a Lasting Power of Attorney and with or without an offset facility.

How the offset works

The new Vernon Offset Retirement Mortgages allow RIO borrowers to effectively reduce their borrowing if they hold funds in an offset savings account with the Society.

For example, if a borrower takes a £50,000 Retirement Mortgage, but only wants to access £20,000 of that money immediately, they can put the remaining £30,000 into their offset savings account where it will be offset against their mortgage, meaning interest would only be incurred on the £20,000 balance.

The offset savings account is set up on an instant-access basis, so the borrower can withdraw money as and when they need it. As they spend money from their offset savings account the amount offset against their mortgage will reduce, therefore an increased loan balance will then incur interest. If their circumstances change they can also add to their own savings, making this one of the most flexible retirement mortgages on the market.

The mortgage is underwritten and assessed for affordability based upon the full amount applied for at outset.

Choose your RIO

Ian Keeling, director of sales and marketing at Vernon, said: “Our customers are looking for new opportunities to safely release cash from their homes and seeking more flexibility from lenders. We were one of the first lenders to identify the needs of older borrowers by launching our Retirement Mortgage range in 2015. As an innovative and agile mutual business, we’re now delighted to expand the choices available to them.

“Our offset account allows borrowers to have certainty of instant access to a larger sum of money should they need it, without incurring interest until they use it.

“Of course, advice is essential, either through a regulated mortgage broker or directly through our experienced advisers. Borrowing in later life is a big decision but we are committed to giving customers greater control and choice over their finances.”

The Retirement Mortgage range (1/4/19)

PRODUCT	RATE	FEE	ERC
3-year discount with LPA	3.49%	£499	3% for 2 years & 2% year 3
3-year discount OFFSET with LPA	3.49%	£499	3% for 2 years & 2% year 3
3-year discount with no LPA	3.99%	£499	3% for 2 years & 2% year 3
3-year discount OFFSET with no LPA	3.99%	£499	3% for 2 years & 2% year 3
5-year discount with LPA	3.95%	NONE	NONE
5-year discount with no LPA	4.70%	NONE	NONE

All retirement mortgages available up to a maximum LTV of 50%, SVR 5.2% (2/4/19), available direct and through intermediaries