Retirement Interest Only (RIO)
The Retirement Interest Only Mortgage (sometimes called a ‘RIO Mortgage’) is available to people over 55. It’s a loan secured against your home. You pay the interest each month, which means the amount you owe doesn’t increase over time.
You can use it for most purposes (including paying off an existing mortgage). What’s more, you don’t have to repay the balance of the loan until you, or the last remaining borrower die or move permanently into long-term care.
This is a relatively new product. They are designed for retired clients who want to have access to a standard mortgage but who want to keep the cost down by not repaying the capital each month.
We will use our specialist knowledge of the market to explain all the relevant factors and to find the best solution that fits your circumstances.
Things you need to think about when considering a Retirement interest Only Mortgage.
You have to pay the interest on this product each month, just like with a standard interest only mortgage. You can’t decide to roll up the interest or pause payments.
As a result, your ability to afford the mortgage payments will be vigorously assessed.
If you are applying as a couple, the lowest surviving income between you will be used to assess how much they will let you borrow.
Lenders will often take current and future income into account, however this can include investments or future pensions but will generally be retirement income.
Although the mortgage has no term, the rate of interest will normally be fixed for a set period. Typically this will be 2, 3, 5 or 10 years.
After that time you will move on to a Standard Variable rate and your payments could increase. The rate is not generally fixed for the life of the mortgage. They normally do not come with a drawdown facility.
An advantage of this can be that you are not tied in long term but at the same time you can find payments increase over time.
Book an appointment today with one of our professional advisers. There’s nothing to pay in advance and no obligation.
Another advantage for some customers is that the amount you can borrow is linked to your retirement income(s) and not your age or the relative value of your home.
For younger customers receiving retirement income, you can sometimes borrow more with a RIO than you can with a lifetime mortgage.
The properties can come with a product/arrangement fee and you also have to pay for a valuation.
Standard Mortgages
Retirement Interest Only
Term Interest Only
Equity Release
Buy to Let