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RIO Mortgage (Retirement Interest Only)
If you own your own home and have equity in the property, then a retirement interest only mortgage might be ideal for you if you are an older borrower. It is a product that can help older borrowers to get a mortgage loan who may otherwise have struggled to qualify for a standard residential mortgage.
What is a retirement interest only mortgage?
As the name suggests, it is a type of mortgage which allows you to borrow against your property and only interest payment is required back by the lender each month.
The initial loan amount is repaid once the property is sold, or if you move into residential care or die. Lenders may add terms for the loan repayment and stipulate repayment by a set number of years or when you reach a certain age.
An option to make sums of capital repayment during the term of your mortgage might be allowed by some lenders and this will decrease the size of the outstanding loan. You can avoid any early repayment charges by checking the lender’s terms.
Retirement interest only mortgages differ from lifetime mortgages as interest does not roll up, providing you with a peace of mind that at the end of your term, only your borrowed amount will need to be repaid.
How much can I borrow?
How much you are able to borrow will depend on a few factors such as your affordability which is assessing your outgoings against your income which might come from pensions, savings or investments. Every lender has different methods of assessing affordability and being unacceptable to one lender might not mean you can’t qualify for another lender.
Due to the fact that it is an interest only mortgage, lenders will only be required to calculate your affordability and prove your income can cover the interest payments unlike a standard residential mortgage with monthly capital repayments involved.
Who is retirement interest only mortgages suitable for?
Generally there are no age requirements but retirement interest only mortgages are mostly aimed at older borrowers over 55s and pensioners and may find this type of product is easier to qualify for compared to other mortgage products.
– If you need to make some home improvements but don’t have the capital required for carry out the changes.
– If you need to release equity from your property so you can use the funds, without rolling up the interest.
– You currently have an interest only mortgage but don’t have the funds saved to repay the capital loan amount but you don’t wish to leave your current home or move to a retirement home.
Useful documents to have ready
• Income information such as state or private pensions
• Details of your savings and investments
• Credit commitments such as personal loans, credit cards
• Tax details
• Life insurance policies details if you have it taken out insurance
If you have further questions or unsure whether retirement interest only mortgage is ideal you then we are here to help you and provide you with more information about retirement interest only mortgages.
If you feel retirement interest only mortgage is right for you and you are ready to apply then get in touch with us today and a mortgage broker can provide you with professional advice and guidance. We have access to a wide panel of lenders so we can provide you with lenders and deals that are tailored to your own individual circumstances helping you to save your time and avoid any difficulties.