(Reuters) - British insurer Legal & General (LGEN.L) said on Monday it has teamed up with Virgin Money VM.L to offer lifetime mortgages to Virgin customers at the end of their interest-only home loan term.
Under the five-year deal, Virgin Money customers aged over 55 with interest-only mortgages will be eligible to apply for the loans.
Regulators told Britain’s banks earlier this year to step up checks on 1.7 million customers with interest-only home loans as in many cases these customers have no clear plan for repaying capital.
“Solving the interest-only challenge is just one area where we see lifetime mortgages as a potentially transformative solution for the lives of UK borrowers,” Steve Ellis, CEO, Legal & General Home Finance, said.
Lifetime mortgages pay a fixed income against the value of a property, which is typically handed over as payment on the customer’s death.
Legal & General, one of the biggest players in the market, already has lifetime mortgage partnerships with Santander (SAN.MC) and The Co-operative Bank, it said.
Reporting by Noor Zainab Hussain in Bengaluru; editing by Carolyn Cohn and Susan Fenton