Mortgage options for the over 50’s

Mortgage options for the over 50’s

If you’re homeowner aged 50 or over and are considering taking a loan out against your home, a retirement interest only (RIO) mortgage could be an option. 

Looking to release extra cash but don’t know where to turn?

If you’re dreaming about an extension, a way of helping your children buy their first home or if you’re looking to settle debts with previous lenders, a RIO mortgage could be an option as it releases equity tied up in your home without having to move or downsize. 

What is a RIO mortgage? 

A RIO mortgage allows you to borrow money against your property, with the monthly repayments covering the interest only and not the loan itself. You can choose to downsize or sell the property, which you can’t do with equity release, and you just need to prove that you can afford the monthly interest payments. 

They are like interest-only mortgages, however, there is no set term, and the loan is repaid when your property is sold either because you’ve moved into long-term care or have passed away. 

How does a joint RIO mortgage work?

Two individuals are named on the mortgage and the terms will apply to both borrowers, meaning that both will need to demonstrate that they can afford the payments. This gives peace of mind that if one of the borrowers die, or moves into a care home, the other can continue to live at home.

Once both named individuals have passed away the house will be sold, and the funds will be used to settle the outstanding mortgage amount. 

Would a RIO mortgage work for my situation?

There are a variety of circumstances when a RIO mortgage would be suitable, including:

  • Your current interest only mortgage is coming to an end and you need to remortgage

  • You’re looking to release equity from your property to enhance your lifestyle or make home improvements

  • You’re looking to settle debts from other lenders

  • You want to support younger family members take their first step on the property ladder and releasing equity will allow you to do this

What is the difference between a RIO mortgage and an equity release mortgage? 

The difference with a RIO mortgage is that you pay off the interest monthly so the amount of interest doesn’t compound like an equity release mortgage. This approach can work out to be a cheaper option in the longer term. Some lenders will also consider you for a RIO mortgage if you’re 50 years or over.

With an equity release mortgage, the interest compounds or ‘rolls up’ as you don’t pay off the interest every month. Interest is charged on the interest itself and the amount you owe can grow quickly with less equity being passed on to your family after you’ve died. This approach could work for individuals who prefer not to make a monthly interest payment or who don’t have close family. You must also be age 55 and over to be eligible.

Your home / property may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances but will be agreed with you before proceeding.

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FAQ’s

If a RIO mortgage is something you’re interested in finding more about, it’s advisable to contact a mortgage advisor so they can specifically discuss your needs and relate it back to your situation. To find out more call our friendly team of advisors on 01565 874 246 or make an appointment here.

Each lender has different limits on how much you can borrow against your home and there will be lots of factors that will have an impact on this. We have a team of qualified mortgage advisors who can work this out for you based on your individual circumstances. Call the team today on 01565 874 246 to find out how we can help you or make an appointment here.

Yes, there are some mortgages where you can repay some of the capital as well as the interest paid, reducing the size of the loan over time, and potentially lowering the amount of monthly interest. It would also mean that more equity is left to pass on to your loved ones.

The mortgage debt is repaid when the property is sold, which will be after you pass away or when move into long-term care. 

Our mortgage advisors can walk you through different options to help you find the right solution for your circumstances. If, after the initial consultation, it is determined that a RIO mortgage is not appropriate for your situation, then we can refer you to a specialist third party for further support. 

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