Who is eligible for a Retirement Mortgage?
A Retirement Mortgage may be suitable for you if you are moving house or re-mortgaging your existing house, you are over the age of 55, you will be over the age of 75 at the end of the mortgage term or wish to use the sale proceeds of your property, either on moving or on death, to repay your loan
You must have a source of income, typically, from a pension, so that interest payments can be afforded for the term of the mortgage, which may be up to your full lifetime. You should consider whether your income is index linked, so that you can be sure it will keep up with the cost of living over the term.
How does a Retirement Mortgage work?
RIO Mortgages are designed to meet the unique needs of older borrowers, who are either looking to release equity or move home. Instead of having a fixed end date, if necessary, the amount borrowed can be paid back from the sale of the property when the borrower dies or moves into alternative accommodation, such as long-term care.
During the mortgage term, the borrower is responsible for meeting the monthly payments, which can be interest-only or capital and interest repayment.
Advantages of a RIO Mortgage
An advantage of Retirement Mortgages is that they can provide older borrowers with access to funds without the need for monthly repayments, which can be particularly beneficial for those on fixed incomes or with limited pension savings. Additionally, retirement mortgages can allow borrowers to remain in their homes while accessing the equity tied up in their property.
Risks of a RIO Mortgage
A potential risk of Rio Mortgages is that the loan balance can increase over time if the interest payments are not made, which could reduce the amount of equity available to beneficiaries upon the borrower's death or sale of the property. Additionally, borrowers should be aware that property values can fluctuate, potentially affecting the amount of equity available to repay the loan.
Get in touch
Thinking about a Retirement Mortgage? Our friendly Mortgage Advisers are on hand to answer your questions, talk you through the details, and help you decide if it’s the right option for you and your family.
Pop into a branch or get in touch - we’re here to help every step of the way.
