A retirement mortgage is a type of mortgage that is designed for older borrowers who may struggle to get a standard residential mortgage. It allows you to borrow against your property and only pay back the interest (and not the loan itself) each month. This means that you can stay in your home and enjoy your retirement without worrying about making large monthly payments.
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 are similar to standard interest-only mortgages but there are some key differences. 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.
If you’re considering a retirement mortgage, it’s important to understand the different types of products available and how they work. You should also consider the fees and charges associated with each product, as well as the interest rates and repayment terms. It’s also important to think about how much you can afford to borrow and how much you’ll need to repay each month.
Retirement mortgages can be a great way to unlock the equity in your home and enjoy your retirement without worrying about making large monthly payments. However, they are not suitable for everyone and it’s important to seek professional advice before making any decisions. A financial advisor can help you understand the different products available and find the one that’s right for you.