Who is a retirement mortgage potentially suitable for?

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.

Is a Retirement Interest-Only mortgage right for you?

What are the advantages of a RIO mortgage?

An advantage of Rio 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, Rio mortgages can allow borrowers to remain in their homes while accessing the equity tied up in their property.

What are the 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.

Important things to consider

• Your home could be repossessed if you do not keep up with payments on your RIO mortgage.

• As we will not lend greater than 50% of a property’s value, it’s unlikely that the value of the house will fall below the amount of the loan, providing payments have been maintained. However if this situation does arise on the sale of the property then the surplus amount will be due from you or your estate.

• Borrowing against your home may reduce the value of your estate. We recommend that you discuss your plans with your family, or others who may inherit your home, so they are aware of your plans.

• If you wish to move to another property then we may consider transferring the loan to the new house at the same time that you sell your home. The decision to do this will depend upon our prevailing Lending Policy and other factors such as the acceptability of the new property for lending purposes, our assessment of mortgage affordability and the loan to value ratio.

• If you need to permanently vacate your home and move into sheltered accommodation or long term care, the loan will become repayable from the sale of your home.

• If your application is in joint names, the mortgage payments may become unaffordable in the event of death of either party. This may necessitate the sale of the property and repayment of the outstanding loan, and the survivor needing to move to alternative accommodation. You should ensure that you have a credible plan for this eventuality.

• You must ensure that the property is maintained to a reasonable standard and any essential repairs are carried out during the term of this mortgage.

• Taking this mortgage may affect your personal taxation position and your current or future entitlement to state benefits. You should consider seeking further information from HM Revenue and Customs, the Department of Work and Pensions or another source of advice such as a Citizens' Advice Bureau.