When considering this type of mortgage there are a variety of matters to carefully consider.
We have set out some key information below. These are not intended to be an exhaustive list or to provide you with personal advice. There are other types of mortgage that we offer that may be more suitable and there are other types of Later Life products that may be more appropriate than taking out a mortgage.
You can obtain general information on how a Retirement Interest-Only Mortgage might meet your needs by talking to one of our specialist qualified Mortgage Advisers.
You can also choose to discuss your requirements or take advice from an Independent Mortgage Intermediary. Please note that not all firms offer advice on Retirement Lending Products and some may charge a fee for providing information and/or advice.
A Vernon Building Society Mortgage Adviser can fully assess your circumstances and needs; and provide you with personal advice, a recommendation and a personalised Illustration for a mortgage product. There is no cost involved in obtaining advice and speaking to them; and this does not commit you to taking a mortgage out.
Vernon Building Society recommends that independent legal & financial advice should be taken if considering/wanting to apply for a RIO mortgage.
- On a Retirement Interest-Only Mortgage we do not lend more than 50% of the property value, meaning that with routine maintenance and improvement to your property it would be very unlikely that the value of the house would fall below the amount owing under the mortgage. You would need to ensure that the property remained suitably insured.
- The mortgage requires you to make monthly payments for the period of the mortgage. These are payments of interest and the balance outstanding will not reduce during the time you have the mortgage, unless you choose to pay additional amounts to reduce what you owe. Other products are available which support repayment of the amount borrowed over a specified period of years.
- There are costs you would incur in taking out the mortgage and you should consider this type of arrangement to be a medium to long term transaction.
- When the property is sold by you or the Executors of your Estate, the mortgage must be repaid, the costs of sale paid, and the remaining funds will belong to you or your estate. An Early Repayment Charge would apply for the duration of your discounted or fixed rate product period, (unless your mortgage has reverted to Vernon Bulding Society's Standard Variable Rate). However, this would not be charged if the sale of the property and repayment of the mortgage was related to the death of the borrower or if a joint mortgage, the death of the final surviving borrower.
- You need to be satisfied that you are comfortable having a mortgage and that you will remain confident in your ability to make the monthly payments for an extended period of years and into your older age.
- You need to consider, by reference to your current income and expenditure, and any expected changes, that you can comfortably afford to make the mortgage payments and meet all your living costs and other commitments. Our ability to lend does require us to assess this and take account of a higher interest rate that might apply in the future.
- Where your mortgage would be in joint names, we would assess your current income and expenditure, and would also consider the changed income and expenditure position in the event of there being only one surviving borrower. This does not mean that the mortgage payment must be wholly affordable on a final survivor basis, but we would need to understand and be satisfied with your planned action(s) if it became unaffordable. Typically, this might be the sale of the property, the repayment of the amount owed under the mortgage, and the final survivor needing to move to alternative accommodation.
- If you are re-mortgaging your home to release funds, you need to consider whether this is what you should do and whether it best meets your needs. We will lend for a wide variety of reasons. You will need to tell us about your plans for the money you borrow, and we will need to be satisfied this appears sensible and responsible, but we cannot advise you on the benefits or disadvantages of your intended purpose. You should be aware that:
- Lending funds to family may not result in this being repaid
- Holding material savings after taking out a mortgage can leave you vulnerable to financial crime or scam
- Raising funds for investment will not typically enable you to generate a return greater than the cost of the mortgage, unless you are willing to accept the risk of loss of capital or return on investment.
- Taking out a mortgage and borrowing money may affect your current or future personal taxation position. Vernon Building Society Mortgage Advisers are not experts on these matters and would only be able to ask you questions and rely on what you tell them.
- Taking out a mortgage and borrowing money can adversely affect your current or future entitlement to state funded benefits. Vernon Building Society Mortgage Advisers are not experts on these matters and would only be able to ask you questions and rely on what you tell them, although, they can direct you to organisations that might help you to improve your knowledge.
- You should consider seeking further information from HM Revenue and Customs; and/or, the Department of Work and Pensions. You should also consider seeking impartial advice from a recognised consumer help organisation, such as the Citizens' Advice Bureau.
- Borrowing against your home may reduce the value of your Estate, either immediately or over time. Vernon Building Society Mortgage Advisers cannot advise you in relation to Tax Planning or Inheritance Tax.
- Because borrowing money into older age is a significant decision and can affect any inheritance you plan to leave, we recommend that you discuss your plans with your family, or others who may inherit your home or benefit from your estate, so they are aware. You may also find that they are a good source of information or support and they might help you be satisfied you have considered the impact of taking out a mortgage.
- We also suggest that you consider making plans for the future, if you have not already done so, to assist in the orderly management of your affairs. This would include each borrower making a Will or setting up a Lasting Power of Attorney for welfare and/or financial matters. You should consider how the absence of these important items might affect you, your family and beneficiaries of your Estate in the future. Your solicitor can provide you with advice on the benefits and costs of these items.