RIO – Retirement Interest Only Mortgages

RIO’s

Retirement Interest Only Mortgages, known as RIO are now available to assist older borrowers who have lending in place on their home that they wish to maintain or increase.

The RIO type retirement mortgage product is designed to:

  • Help fund lifestyle choices and maintain homes for the borrowers lifetime and the future benefit of their family.
  • Give the option to release equity to buy holiday homes, or give children or grandchildren a lift on to the property ladder.
  • Help borrowers with existing interest only mortgages that are coming to an end.
  • Retirement Interest Only Mortgages are are new approach to mortgage lending into retirement for borrowers from age 55.

How the RIO Mortgage works

RIO’s (Retirement Interest Only Mortgages) provide lending on an interest only basis under an open ended, rather than fixed term contract.

This means that you can keep the lending in place until your death, or sale of the home.

Interest payments will be maintained monthly so that there is no build up of debt against the property.

Unlike a standard interest only mortgage, there is no need for a repayment vehicle.

RIO lending is only available on your main residence.

Lending will typically be available at up to 55% of the value of your home.

RIO Affordability

Affordability assessment on Retirement Interest Only Mortgages has been agreed by Lenders with the Financial Conduct Authority and is designed to ensure that borrowers do not get into difficulty in meeting monthly payments on their RIO.

Lending will be based on the lower of current earned income or projected future retirement income.

Since the lending is designed to be available until the home is no longer required. RIO affordability will be based on the lower of the two incomes of joint applicants.

Retirement Interest Only Mortgages (RIOs) and Lifetime Mortgages

RIO’s are a new product which differ from the Lifetime Mortgage arrangements which have been in the market for some time. There are currently a handful of Lenders offering Retirement Interest Only Mortgages, but we expect that number to increase over the coming months as the market develops.

If you have an existing mortgage on a home you wish to maintain for life, it is worth speaking to our team about Retirement Interest Only Mortgages. RIO’s could be the answer for you.

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