These are a relatively new scheme, for those that can demonstrate a regular and significant income into retirement, allowing you to have a traditional mortgage on an Interest-only basis - so the monthly interest cost is paid by your income, and the balance of the mortgage remains the same. The Mortgage will need to be repaid by a particular date, typically 80th Birthday but that will differ between lenders.
When the mortgage has completed its full term, the mortgage will need to be repaid. This may be from own resources or downsizing to a cheaper property.
Such facilities often include an overpayment facility, and may include a free basic valuation and help with the costs associated with the remortgage.
Retirement Interest Only Schemes (RIO) are designed for those with good retirement income, and include the following features.
These Mortgage schemes require you to be able to show you can afford monthly interest payments, either from investment or pension income. This means that the Mortgage balance is not increasing, so it protects your estate value.
The amount you can borrow is linked to what you can afford, rather than a set % based on your age - this could allow you to borrow more than a more conventional Equity Release Scheme.
You can choose to make lump sum payments whenever you want - just check for the annual overpayment allowance , which is typically 10% a year but will be different with each lender and scheme.
Unlike more traditional Lifetime Mortgage and Home Reversion Schemes, by settling the mortgage interest cost each month the amount you are borrowing doesn’t increase. As such, you maintain the level of equity in your property, and look to benefit from future property values.
The property remains yours throughout the term, just like a ‘normal’ Mortgage.
There is no reason why you cannot consider other such schemes once a RIO Mortgage expires. This way, you can benefit from having more equity at an older age, giving you the potential to release more funds.
RIO Mortgages are Affordability tested, so what you can borrow is limited to the level of your income and expenditure. Other schemes may allow you to borrow more.
A number of the RIO Mortgages have a set end date, so they will need to be repaid - other schemes have no expiry date set, and will be repaid on death or on long-term care
RIO (Retirement Interest Only) Mortgages are an ideal solution for those clients who have a good income (typically pension), enough to service a mortgage plus normal day-to-day costs. These facilities give you the ability to borrow whilst retaining your equity, allowing you to hopefully benefit from future increases in value.
As always, it is recommended you speak to an Adviser that is able to advise from all of the different Equity Release Mortgage Schemes, to ensure you get the right advice for your individual circumstances.
What you can borrow on a RIO Mortgage is determined by a more complex affordability assessment. Please get in touch with Essex Home Finance with details of your personal income(s) and current expenditure, and we will assess what you can raise with such a facility.
Essex Home Finance are Mortgage Brokers with access to a significant number of Mortgage Providers and Equity Release Lenders.
Free initial Appointment
One Low Fee payable on Offer
Exclusive Mortgage Schemes
Essex Home Finance Ltd is an Appointed Representative of Mortgage Intelligence Ltd which is authorised and regulated by the Financial Conduct Authority under number 305330 in respect of mortgage, insurance and consumer credit mediation activities only.
Registered address: 1 High Street, Chelmsford, Essex, CM1 1BE. Registered in England & Wales under number 10607263.
Your home may be repossessed if you do not keep up repayments on your mortgage
There will be a fee for all Equity Release Mortgage cases. Typically our fee will be £695, payable on Offer. We will agree any fees with you before we proceed with your case.
We always aim to provide a high quality service to our customers. However, if you encounter any problems and we are unable to resolve them you can take your complaint to an independent Ombudsman.
Our advice is covered under the Financial Ombudsman Service. You may be able to submit a claim through the EU Online Dispute Resolution Platform If you live outside the United Kingdom or if you prefer not to deal directly with the Financial Ombudsman Service.
Essex Home Finance Ltd
1 High Street
Email : firstname.lastname@example.org
Tel : 01245 398466
Mob : 07795 081972