An interest-only mortgage for over 60s is possible subject to affordability checks and a suitable property value. However, this is not the same as a retirement interest only mortgage (RIO). RIOs are specialist later life mortgages that enable you to borrow against your property. It is important to know the differences between these types of mortgages, and to speak with an independent adviser before proceeding.
Unlike standard mortgages, with RIOs you only pay off the interest each month. You only repay the capital when you die, move into permanent residential care or sell your property.
The FCA has recently relaxed rules surrounding these types of ‘later life borrowing’. This has led to an increase in lenders offering new RIO products. As a result, there is now a wide choice of retirement interest only mortgages available for people aged 55 and over.
Navigating Your Financial Future: Exploring Interest-Only Mortgages for Over 60s
Lenders approach these mortgages in various ways, but many have similar rates and policies. Examples include Lloyds pensioner remortgages over 55, Barclays rio mortgage and family building society remortgages for over 60s. In most cases, a lender will want you to have a stable income and a sufficient credit score in order to be eligible for a retirement interest only mortgage.
RIOs can also be used to release equity in your home for other purposes, such as helping your children or grandchildren get onto the property ladder. You can find out more about this by reading our article ‘The Bank of Mum and Dad’.