Legal & General Group PLC (LON:LGEN) signed a deal with Virgin Money to offer lifetime mortgages to Virgin customers at the end of their interest-only home loan term, Reuters reported.
The newswire said that, under the five-year deal, Virgin Money customers aged over 55 with interest-only mortgages will be eligible to apply for the loans.
READ: L&G expects asset management arm to deliver profit growth as strategy pays off
Legal & General, one of the biggest players in the market, already has lifetime mortgage partnerships with Santander and The Co-operative Bank, it 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.
Regulators told Britain's banks earlier this year to step up checks on 1.7mln customers with interest-only home loans as in many cases these customers have no clear plan for repaying capital.
Steve Ellis, CEO, Legal & General Home Finance, told Reuters. "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.
Legal & General reports its first-half results on Thursday, with analysts at UBS expecting the blue-chip insurer’s underlying operating profit to grow by 5% year-on-year driven divisionally by strong growth in its investment management business and less buoyant growth in annuities.
However, the Swiss bank sees L&G’s headline IFRS operating profit falling by 11% year-on-year to £882mln given the absence of any mortality reserve releases this time out,
The UBS analysts forecast L&G paying an interim dividend of 4.61p, which they said would fall short of the around 7% growth rate the market expects for the pay-out.