Later Life Lending & RIO (Retirement Interest Only Mortgages

Later Life Lending

The government abolished mandatory retirement at 65 in 2011, meaning many people’s earning potential has been extended. In addition to this, many people throughout society are making major financial decisions later in life than was the case just a few decades ago. Here at Mortgage Lolly – we know that more and more home owners, want to be able to access money against their property, in later life, but do not want to use equity release to do so. Mortgage Lolly have 25 years of experience and have expertise in using our extensive knowledge of how the system works, to secure mortages for lenders close to or past retirement age, in a variety of different circumstances.

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WHAT IS A LATER LIFE MORTGAGE?

Later life mortgages are aimed at those over 55, and is a product with a fixed term, that runs until a certain age, normally past statutory retirement age. In some cases, particular lenderss will allow a mortgage term up to 95 years of age.

Like a standard mortgage, a later life mortgage can be arranged as capital repayment or interest only and borrowing dependent on income and affordability, with monthly repayments being required.

Retirement Interest Only (RIO) Mortgage

RIO Mortgages are standard home loan deals with one key important difference. In this case, the mortgage does not have a set end date and continues on until “a specified life event” is triggered – ie, the borrower’s death or until they move into a care home. Until then the borrower continues to pay the interest each month and the loan is ultimately repaid from the sale of their property.

Pros With retirement interest-only mortgages, generally all you need to do is prove you can meet the monthly interest payments. Smaller monthly payments mean a lower drain on finances.

Cons These plans are still based on affordability into retirement and therefore financial circumstances will have to meet a higher bar to meet the criteria. The principal does not go down.

Later life Repayment Mortgage

A repayment mortgage, is a standard fixed term mortgage – the only difference is that later in life, the criteria for borrowing will be stricter, with more scrutiny of higher levels of income, and larger deposits than those borrowing earlier in life.

Pros: As the whole debt is repaid – there is more to leave behind to loved ones.

Cons: As you are paying off the principle loan, as well the interest the payments will be higher each month which means affordability criteria is higher.

Lenders usually assume your earning potential will decline as you get older, and therefore will want to see sufficient evidence of income over the longer haul, including pensions, savings, shares and other assets, before they consider

Many lenders will set age limits of 65-70 for applications, and 70-85 for end of term – so repayments will generally be higher over a shorter term.

CONTACT US TODAY AND GET FEE-FREE AFVICE YOU ON YOUR BEST OPTIONS FOR A LATER LIFE MORTGAGE.

Later Life Lending