Lifetime Mortgages (Equity Release)
How do they work?
Who can apply?
Different types of Mortgage
Retirement-interest only Mortgages
Retirement-interest only mortgages (RIOs) are a relatively new set of products designed to help older borrowers who may struggle to get a standard residential mortgage. They allow you to borrow against your property and only pay back the interest (and not the loan itself) each month. With most RIO mortgages, you only repay the loan when you sell your property, move into residential care or die. But some retirement-interest only mortgages carry terms like a regular mortgage, meaning you either pay them back after a set number of years or when you reach a certain age - 90, for example. Rather than the onerous steps you have to take to prove your income with a standard residential mortgage, you only have to prove that you can afford the interest. Some retirement interest-only mortgages allow you to repay some capital as well as interest. This will cut down the size of your loan over time, meaning that more of your property can be passed onto your loved ones.Each lender has different limits on how much you can borrow against your property. If you're borrowing on an interest-only basis, you're likely to be able to borrow less than if you get a deal where you also pay down the loan. There will be other requirements, too, such as a minimum property value, minimum income and minimum loan size. The amount you can borrow will be based upon an affordability assessment, looking at your income and outgoings to make sure you can keep up repayments once your only sources of income are from pensions, savings or investments, and not employment.