Retirement Interest Only Mortgage

How to Safely Release Home Equity With an Interest-Only Lifetime Mortgage Plan After Retirement

Looking for a Great Retirement Interest-Only Mortgage Package? Find Out if You Qualify, What You Can Expect and Whether it's the Best Option for You.

Before You Start Reading....

 

Equity Release Calculator

Value of Your Home?

50000

Drag me

đź”’ 100% Secure & Fast. Takes Just 8 Seconds.

timer

It's VERY FAST, takes just 8 seconds

What’s a Retirement Interest Only (RIO) Mortgage?

Audio Thumbnail
Sound Bar

It’s your 40th wedding anniversary, and after 35 years of raising kids and grandkids, you want to have the most memorable anniversary with the love of your life. You’ve been talking about having a Caribbean wedding, and you think this would be the best time to make that dream to come true. However, after checking out your finances, you realise that you don’t have enough capital to give your wife the best day of her life.

Well, worry, not. In the current financial market, mortgage1 lenders are offering older borrowers fantastic mortgage options in retirement like the retirement interest-only mortgages.

If you need more information on though, be sure to check the guide on How Does a Lifetime Mortgage Work in Oct 2021?

That said here’s a detailed guide on what these mortgage schemes are and how they work.

Before we continue: Try Our Retirement Interest-Only Mortgage Calculator

Demystifying Retirement Interest-Only Mortgages

Demystifying Retirement Interest-Only Mortgages in Oct 2021

It can be difficult to access cash when you’re close to retirement or two years into your sunset years. While most mortgage providers have relaxed their upper age limits for standard loans, there can be several restrictions.

For instance, you have to provide proof that you can afford to make monthly mortgage reimbursements in retirement. It means you have to pass the mortgage company’s credit, income, and affordability checks. Proving income while in retirement can be challenging, and it’s where obstructions to retirement lending arise. P60’s2, state pension letters, projections, SA302’s, investment, and pensions statements are standard requirements when you’re taking a retirement loan option.

Therefore, in response to the restricted borrowing prospects for older proprietors, the national financial services regulator – the Financial Conduct Authority3 (FCA) decided to relax its rules. Therefore, today there are residential mortgages that you can repay when the last homeowner passes on or move into residential care, like the retirement-interest only mortgage (which somewhat resembles the equity release4 plans).

Unlike the traditional residential mortgages, the RIO mortgage scheme allows you to continue residing in your estate, and you only have to pay back the interest (not the mortgage itself) every month, thus allowing you to save up some cash for inheritance.

How Does A RIO Mortgage Work

How Does A RIO Mortgage Work?

The FCA regulated the best retirement interest-only mortgage in March 2018. These mortgage plans are in Oct 2021, the fourth most popular sunset-years-loan available to homeowners over the age of 55.

The mortgage schemes resemble the traditional interest-only mortgage where you have to repay the interest accrued over the loan every month. It helps in maintaining a level of balance throughout the life of your loan.

The main difference between an interest-only mortgage after retirement plan and a retirement mortgage is that the retirement interest-only loan has no fixed term and only requires repaying when you die or move out permanently.

Benefits of Retirement Interest-Only Mortgages

Benefits of Retirement Interest-Only Mortgages

There are numerous benefits of the retirement interest-only mortgage plan in Oct 2021, and some of these include:

  • The interest rates5 can be lower than that of the lifetime mortgage schemes
  • You don’t need financial advice, even though most financial experts recommend it
  • You can borrow more capital with the RIO than a lifetime mortgage
  • You can repay the mortgage plan early, although there might be associated with early repayment charges
  • Your inheritance is probably going to be more substantial than when you take out an equity release mortgage
  • You have the right to move homes or to downsize as with the lifetime mortgage
Drawbacks of Retirement Interest-Only Mortgages

Drawbacks of Retirement Interest-Only Mortgages

There are several disadvantages of the retirement interest-only mortgage, and some of these include:

If you have an existing mortgage, you have to make sure that you repay it first, as with all lifetime mortgage plans

  • You’ll have to pass the mortgage provider’s income and affordability checks successfully
  • You’ll have to make monthly interest repayments
  • Your interest rate might be fixed for the short term and could go up or down in the future (depending on your plan provider)
  • You have to renew the mortgage scheme at the end of the initial interest-rate period – potentially incurring new costs and charges associated with taking out a residential loan policy
  • As with the lifetime mortgage schemes, your estate will be ultimately sold to repay the mortgage provider, impacting the amount of inheritance you’ll leave behind

Anything is possible with the right mortgage option. Therefore, start making those plans and give your wife the wedding anniversary of her life with the retirement interest-only mortgage. It couldn’t get any better! Nonetheless, even if you don’t have to get financial advice, make sure that you consult your financial adviser so that you can learn all there’s to know about the mortgage, and he/she can also help you get the best RIO mortgage deal and with the best loan provider on the market in Oct 2021.

So, if you need to learn more about this and what suits your needs best, be sure to click here and see how much equity5  you can release and also chat with an expert for free.

Our Most Commonly Asked Questions

âś…

What’s the Retirement Interest-Only Mortgage?

âś…

Who Offers the Retirement Interest-Only Mortgage Plans?

âś…

How Much Can You Release with the Retirement Interest-Only Mortgage?

âś…

How Do You Qualify for the Retirement Interest-Only Mortgage?

âś…

How Much Can You Borrow with A Retirement Interest-Only Mortgage?

âś…

How Does A Retirement Interest-Only Mortgage Work?

Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

Contributors: Nicola Date, Katherine Read
Reviewed by Francis Hui

Retirement Interest Only Mortgage

You may also like

HOW MUCH EQUITY CAN YOU RELEASE?

Most people are using equity release as a means of retaining the use of their house while also obtaining a lump sum or a steady stream of income. Get matched with an expert and check your eligibility for equity release options.

Use our free equity release calculator & see how much you can release today.

How Much Can You Release?

Use the FREE Calculator Below 👇

 

Equity Release Calculator

Value of Your Home?

50000

Drag me

đź”’ 100% Secure & Fast. Takes Just 8 Seconds.

As Featured In
yahoofinance marketwatch
rachel w

Written by
Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
john lawson profile.jpg

Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.
francis

Written by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
kath icon

Written by
Katherine Read
Financial Planning Reporter

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.
nicola

Written by
Nicola Date
Writer & Financial Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

See How Much You Can Release 👇

Use the QUICK form below.

 

Equity Release Calculator

Value of Your Home?

50000

Drag me

đź”’ 100% Secure & Fast. Takes Just 8 Seconds.

As Featured In
yahoofinance marketwatch