Mark Gregory of Equity Release Supermarket is back in 2024 to help you with your later life mortgage questions. He kicks off the year by helping a reader with a question about interest-only options
The Question
I wondered if you could advise on how I might take out a retirement interest-only mortgage and which lenders can help?
I am 65 and due to remortgage soon but I am worried about interest rate hikes to standard mortgages, so wondered if interest-only would be a better financial choice.
Mark’s Answer
Thank you for your question and I can confirm that retirement interest-only mortgages (RIOs) were specifically designed to help homeowners replace their current interest-only mortgages which may be coming to an end. These are homeowners who either do not have an investment vehicle to repay the loan or who want to continue with a similar mortgage arrangement.
Although they are called Retirement Interest only Mortgages, they are actually available from age 50. However, unlike a conventional interest-only mortgage where the balance is repaid at the end of an agreed term, with a RIO mortgage, the balance is repaid when you die or move into long term care.
It is important to remember that RIOs are residential mortgages, and this means that you must pass the lender’s income and affordability checks to qualify, and this income assessment is based on your income in retirement, and not your current employment income if you are not yet retired.
Similarly to conventional mortgages, your home may be repossessed if you don’t keep up your monthly interest repayments during your lifetime.
RIO mortgages are provided by building societies and insurance companies including Legal & General, specialist RIO lenders like Livemore and Hodge. To give you peace of mind, Legal & General and Livemore currently provide a fixed interest rate for the entire term of the plan, so you would know exactly what your payment would be for the rest of your life.
Alternatively, some providers have fixed or discounted rates over two, five, and 10 years. Like a conventional mortgage or a lifetime mortgage, I strongly advise that you talk to one of our friendly, specialist advisers who can recommend and have access to all later life capital raising options across the whole marketplace, and they will assess your requirements, confirm what you are eligible for, and then make a bespoke, personalised recommendation for you.
Meet our expert…
Mark Gregory, founder and CEO of Equity Release Supermarket, is here to answer your questions. Mark is an adviser himself with over 20 years equity release experience.
He launched Equity Release Supermarket 10 years ago and it has grown to become one of the UK’s leading equity release specialists.
Email kate.saines@emap.com to ask Mark a question
