As the name suggests, Retirement Interest Only (RIO) mortgages are aimed at borrowers that will be retired from their full time occupation during its term. In the past, such mortgages have been treated the same as Equity Release plans and as such, the complexity of the advice required has been significantly higher than for those taking a standard mortgage product.

Retirement Only mortgages are generally aimed at borrowers who are too old for standard mortgages and too young for Equity Release

The Financial Conduct Authority have now decided to group Retirement Interest Only mortgages with standard mortgage products which, it is hoped, will expand the products available to borrowers in this market and improve their regulation

Unlike Equity Release and Lifetime Mortgages where homeowners might part with equity in their home in return for an income or capital lump sum, Retirement Interest Only Mortgages ensure that the homeowner owns all their equity, subject only to a mortgage. As long as the borrower continues to pay the interest, the homes, and any increases in its value, remains entirely their own.

With many in ‘Generation X’ now in early retirement or or at least starting to think about it, the Retirement Only Mortgage is likely to be a popular addition to the shopping cart for the more mature homeowner. This is particularly true of homeowners that own their homes on existing Interest Only loans and who have not made sufficient provision for the repayment of the loan capital at the end of the term.

Of course, for this sort of loan to be useful, the borrower must be able to prove that they have a reliable source of income that will enable them to properly service the debt until such time as they sell their home, move into long term care - or die.

For more information on the options open to homeowners in or nearing retirement, contact our specialists at Mortgage Required in Maidenhead on 01628 507477.

Download our Free First Time Buyers Guide

Recent posts

Data shows landlords could miss out on green mortgages due to expired energy performance certificates.

Buying a house is a big deal, and where you are planning to buy will make a difference financially. In this short blog, we look at the most affordable and most expensive areas and how much you need to be earning to buy in there.

Equity release is a type of mortgage that allows homeowners 55 and over to access money from their property's equity without having to leave their home. This is done by securing a loan against the house which is usually repaid by selling the property when the borrower passes away or has to move into long-term care.

It’s important to ask questions about the property you are interested in before taking that step to make an offer. A little probing can make all the difference between buying your dream house or something that requires a lot of work.

There are millions of homeowners over the age of 60 who are likely to release money from their homes to pay for their lifestyle during retirement giving those who are 'asset rich but cash poor' a way to live out their retirement the way they wish. 

The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.

Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months. 

According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.

If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.