Retirement Lifetime interest-only mortgages

The FCA has redefined retirement interest-only mortgages – RIOs – as standard mortgages, not lifetime, to improve access to borrowing for older consumers including interest-only borrowers, as a result, there has been a rise in the number of lenders offering interest-only mortgages

Interest only mortgages have been around for a long time in the 1980s, they were commonly known as endowment mortgages in the 1980’s.

Retirement interest-only

Interest only mortgages into retirement are mostly available to people who have lower loan-to-values, borrowers must be able to prove they have a repayment strategy in place.

An interest only lifetime mortgage is a form of equity release but with inheritance protection.

For those looking for an alternative to roll-up equity release schemes, an interest only lifetime mortgage can be a sensible retirement option.

If pension income is sufficient to meet regular monthly payments & you are comfortable with the knowledge that your are reducing your beneficiaries, inheritance, then a lifetime mortgage on an interest only basis could prove to be a good solution.

Lifetime interest only mortgages for retirement

Anyone over the age of 55 is eligible for an interest only lifetime mortgage. As long as monthly payments of interest are maintained, then the mortgage balance with remain exactly the same throughout the term of the loan. With an interest rate that is fixed for life, you have the assurance of knowing that monthly repayments will never change.

Therefore, should mainstream mortgage rates rise, the interest only mortgage is protected from such increases. Some lenders allow you are able to make overpayments of up to 10% on a lifetime mortgage so you could reduce your loan without redemption charges.

The decision making process for an interest only lifetime mortgage can be just as important as a roll-up equity release scheme. Firstly, all current & future scenarios must be considered & action plans put in place for such scenarios. We also advise that life insurance is considered to repay the mortgage on death.

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If you are considering equity release we recommend that you read is it right for you? carefully.