Selina Advance has launched a new type of mortgage, which allows home owners to borrow flexibly against the equity built up in their property.
The product is called a home equity line of credit or Heloc, and the lender says it is the first of its kind to launch in the UK, but that such loans are common in the US, Canada and Australia.
Borrowers can take out a credit line of between £25,000 and £1m, only paying interest on the amount that they actually draw down.
Homeowners can make unlimited drawdowns and over-payments during the term and there are no early-repayment charges.
Pay rates start from 3.95% or a representative annual percentage rate charge (APRC) of 4.96%.
Selina says its products are targeted at affluent homeowners who wish to make large purchases or fund home renovations.
Terms range from five to 30 years.
There is a £995 product fee, but no charge for valuation or legals.
Selina Advance co-founder Hubert Fenwick says: “Helocs offer a new way for homeowners to finance their lifestyle; perfect for those who have worked hard to build up equity in their property, enabling them to benefit from this to borrow affordably and responsibly.
“Our research has found that the majority of homeowners are making big changes to their homes and Selina Advance is an affordable and flexible way for them to do this.
“As a homeowner you are rewarded with low rates compared to most other forms of unsecured personal credit (bank loans or credit cards) while having greater flexibility than a remortgage by only paying interest when you drawdown on your line of credit and no early repayment fees are applied.
“A heloc is the best form of hybrid between a mortgage and a credit card; it’s as affordable as a mortgage and as flexible as a credit card, plus you can borrow large amounts of money over longer terms making the monthly payments affordable.”
He adds: “We anticipate demand for these types of products to rocket in the UK over the next five years.
“Similar to other countries we expect them to be the first choice of credit for homeowners.
“There is a gap in the market for this product as it’s perfect for homeowners to benefit from the equity they have built up in their property.”
