Tel: 07967 688708

sales@linkmortgages.uk.com
Link Mortgages Mortgage Advice

Retirement interest-only mortgages (RIO)

Do you have an interest only mortgage that is due for maturity but don’t have a repayment method in place? If so we may be able to help you.

We have lenders offering a Retirement Interest Only mortgage for those age 55 or over. The borrower pays interest only to the lender with none of the capital being repaid, and the mortgage can go to age 95. The mortgage is repaid when the borrower either dies or goes into long term care. The minimum age for the scheme is 55 and checks are made to ensure that applicants have sufficient income to meet monthly mortgage payments.

If it is a joint application then a check will be made to ensure that the surviving partner has sufficient income to meet payments. Interest on the mortgage is not rolled up.

RIOs have been specifically designed for people who are age of 55 and over.



Who Retirement Interest Only Mortgages are for

The Retirement Interest Only mortgage is aimed at the following people.

1. Those on a current interest only mortgage whose mortgage is coming to an end and are unable to repay the capital balance.

2. Those who want to release equity to help children or grandchildren onto the property ladder.

3. Those wanting to release equity for home improvements or to improve their retirement lifestyle.

Maximum loan to value is usually 50% but we do have lenders who will go to 75% loan to value.

Please call the office on 01274 673000 or mobile 07967 688708 for further details, or email us at sales@linkmortgages.uk.com



What you need to know about RIO Mortgages

  • Borrowing is based on income - You will need to pass the lenders mortgage affordability checks to prove the lowest earner can afford the interest only repayments
  • RIO mortgages are only available for standard ownership. It is not an option for things like shared ownership or Right to Buy.
  • With a RIO mortgage you can overpay by up to 10% of the total amount of the loan each year without incurring an Early Repayment Charge.
  • RIO mortgages are not available if you live on the Isle of Man, Scilly Isles or Channel Islands.


Advantages and disadvantages of a retirement interest-only mortgage
compared to a Lifetime Mortgage

Advantages

  • There is the potential to borrow more than a lifetime mortgage especially when you are between 55 and 65
  • Interest-only monthly payments can be lower than with a repayment mortgage
  • The interest rates can be lower than that of a lifetime mortgage
  • The inheritance you leave is likely to be higher than if you went with an equity release plan where there are no monthly payments and the interest is rolled up
  • The mortgage can be repaid after any discounting period which can give greater flexibility

Disadvantages

  • Your home is at risk of being repossessed if you do not keep up with your monthly payments
  • You will not repay the mortgage. The mortgage is repaid when the property is sold, either though downsizing or the last surviving applicant leaving the property
  • You need to make monthly repayments which can change depending on the bank rate of England and/or the mortgage lenders own criteria
  • You will still need to pass affordability checks, to make sure the lowest earner can afford the monthly interest payments and maintain the property
  • The amount you are allowed to borrow depends on your guaranteed earnings such as a pension
  • They do not offer a draw down facility