RETIREMENT INTEREST ONLY MORTGAGES

Let us take care of the mortgage, while you enjoy your golden years.

 

Retirement Interest Only mortgages are a fairly new addition to the mortgage market. They are designed to help older borrowers borrow against their property in a very similar way to a standard mortgage. With a RIO mortgage, the goal is to provide financial flexibility for those in their golden years. These mortgage options cater specifically to older borrowers (generally for borrowers aged 55 years and over), allowing them to tap into the value of their property while still enjoying the benefits of homeownership.

Similar to standard mortgages, retirement interest-only mortgages involve borrowing against your property. However, the key difference lies in the repayment structure. Instead of requiring you to make monthly repayments on the mortgage itself, to repay the mortgage over a set period, these mortgages only require you to cover the interest charges. This means that your debt remains intact throughout the term of the mortgage. It is important to note that retirement interest-only mortgages typically do not have a set end date, and the mortgage will generally be cleared when the property is sold, or you pass away.

 

This unique feature provides a sense of stability and security for retirees, as they do not have to worry about paying off the principal mortgage amount. Instead, they can focus on enjoying their retirement and making the most of their hard-earned savings, giving them peace of mind. A mortgage broker can help retirees navigate the complex process of obtaining a RIO mortgage, ensuring they get the most appropriate terms and rates available dependant on their personal situation.

One of the main advantages of retirement interest-only mortgages in later life is that they allow older borrowers to access the equity in their property without having to sell it. This can be particularly beneficial for those who may need additional income to supplement their pension or cover unforeseen expenses. With a retirement interestonly mortgage, you can unlock the value of your home while still retaining ownership and the ability to pass it on to.

Your home may be repossessed if you do not keep up repayments on your mortgage.

There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £495. 

How we can help

The benefit to these mortgages is that the lenders works the affordability out on whether you are able to afford the interest only, and aren’t looking to see if you are in a position to be able to fully pay the mortgage off over a specific period of time. You still have the option however, if your income allows, to pay the mortgage down or simply maintain the interest payments. As a mortgage broker, it is important to ensure that we provide you with all the receive relevant advice so that you understand your options and make informed decisions about your mortgage. On this basis it is also be recommended to review this option vs Equity Release. Both options have their advantages and it is important to consider which option would work best for the individual client based on their financial position.

Who can apply for Retirement Interest Only mortgages?

These mortgages are only available to applicants, including any other party to the mortgage, who is over the age of 55 and looking to either remortgage a current mortgage, purchase a new property or release equity from their current property. The majority of lenders have no maximum age limit at the time of application i.e. you could apply at any age above 55, assuming your income can be verified and is at a suitable level to be granted the mortgage. There is also, generally, no end date to the mortgage or maximum age for when the mortgage will need to be repaid. Lenders will look at each application on their individual merits and underwrite the application according to their own lending criteria.

We’ll support you with round-the-clock service, right through to completion.

Why would you need, or consider, a mortgage when you are older?

There are numerous reasons why people are taking on mortgages as they get older, or continuing their mortgage past retirement age:

They may have a current mortgage that they are struggling to pay off or are coming to the end of their term with their mortgage and therefore need to re-mortgage away from their current lender

They may wish to release capital from their property for home improvements or a large purchase
They may wish to gift money to family members

They may wish to use the money to provide extra income

They may wish to release funds to do all those things that had to be put off due to working and raising a family

When do I need to pay my mortgage off?

Most lenders who offer Retirement Interest Only mortgages allow their customers to remain in the property and to continue to maintain the interest payments until they

R

Decide to sell the property and downsize freeing up funds to repay the mortgage

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They move to a retirement home and therefore sell their property

R

They die and the estate then settles the mortgage on the property

Latest Mortage Deals.

We’ve picked out some of today’s holiday let mortgage rates to give you an idea of what interest rates could be available to you.

MORTGAGE CALCULATOR

How much can I borrow?

year(s)

Your total monthly payment

Principal & Interest

To discuss your options, call us today on 01242 696235

Please note that this is only an illustrative calculation and our brokers will be able to provide a more accurate affordability figure once they have discussed your current financial position.

FAQs.

What is the best type of retirement mortgage?

The type of retirement mortgage that will be advised depends on individual circumstances and preferences. Some popular options include interest-only mortgages, lifetime mortgages, and equity release schemes. It’s important to consult with a qualified Mortgage Broker and/or Equity Release Broker to determine the most suitable option for your specific needs.

What are the benefits of a retirement mortgage?

Retirement mortgages offer several benefits, including the ability to release equity from your home, provide an income in retirement, and potentially reduce inheritance tax liabilities*. They can also allow you to stay in your home for longer and maintain a comfortable lifestyle during retirement.

*NB. We can not advise on Inheritance Tax and would always recommend speaking to a qualified Financial Advisor who is qualified in providing Inheritance Tax Advice before making any decision to raise a mortgage on your home for Inheritance Tax purposes.

Is there a difference between fixed rate and variable rate mortgages?

Yes, there is a difference between fixed rate and variable rate mortgages. With a fixed rate mortgage, the interest rate remains the same throughout the period that you have fixed the mortgage for. On the other hand, a variable rate mortgage has an interest rate that can fluctuate up and down over time based on market conditions.

How can you find the right lender for a RIO mortgage?

We would always advise speaking to a Mortgage Broker who is licensed to advise on these types of mortgage, as they will be able to review your personal circumstances and advise you of the most appropriate mortgage based on your individual circumstances and needs.

What is the difference between remortgaging and an RIO mortgage

The main differences between a RIO mortgage and a standard mortgage are:

  • A standard mortgage will generally need to be repaid by the borrowers retirement age, a RIO mortgage is designed for those borrowers who are already retired or will be retiring sooner rather than later
  • A RIO mortgage only requires the interest to be serviced over the time that the borrow holds the mortgage
  • Generally, a RIO mortgage is only repaid on the death of the borrower or the property being sold

When you put down roots, so do we.

Working with our long-standing charity partner, Gloucestershire Wildlife Trust, we pledge to plant a tree in your name when your mortgage completes.