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.

 

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

There will be no fee for Mortgage Advice. There may be a fee for arranging a mortgage. The precise amount will depend upon your circumstances, but we estimate it to be £399.

Mortgage Required Ltd, Finance House, 5 Bath Road, Maidenhead, SL6 4AQ is authorised and regulated by the Financial Conduct Authority reference 573718 at www.fca.org.uk.

The Financial Ombudsman Service is an agency for arbitrating on unresolved complaints between regulated firms and their clients. More detail can be found on their website: www.financial-ombudsman.org.uk

Call: 01628 507477