Retirement Interest Only Mortgages
Retirement Interest Only (RIO) mortgages are loans secured against your property, where you only pay the interest until you either die or move into long-term care. At that point, the capital is repaid by selling your property. However, you have the flexibility to repay the borrowing sooner if you wish.
A RIO mortgage does not require a separate repayment vehicle for settling the loan. Instead, it relies on the equity in your property. Each lender may lend different amounts based on their criteria and your income. You must demonstrate a suitable amount of income, which must continue for the rest of your life. Both earned and pension income are accepted.
RIO mortgages offer an excellent alternative to standard interest-only mortgages in later life. They remove the requirement to repay the loan by the end of a defined term. Additionally, they may be a strong alternative to equity release plans, as the agreement lasts until the end of life, and the terms for early repayment are generally more favourable.
Equity Release
Equity release allows you to access some of the tax-free funds from the value of your home, helping you take control of your later life finances. The money released can pay off your existing mortgage, support family members, make home improvements, or boost your income/pension.
However, equity release is not free money and will need to be repaid. Repayment methods vary by lender. Some allow monthly or periodic payments to manage the interest, while others 'roll up' the interest, collecting the outstanding balance upon death or entry into long-term care.
Ensure your broker and any plan you accept comply with the Equity Release Council's terms and conditions, providing you with a tier of protection. It's also essential to include your family in your decisions and seek appropriate legal advice.
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Equity Release and Later Life Lending: Frequently Asked Questions
What is a Retirement Interest Only (RIO) mortgage?
A RIO mortgage is a loan secured against your property where you pay only the interest until you die or move into long-term care. The capital is repaid by selling your property.
How does equity release work?
Equity release allows you to access tax-free funds from your home's value. The money can be used for various purposes, but it will need to be repaid, usually upon death or entry into long-term care.
What are the benefits of a RIO mortgage?
RIO mortgages offer flexibility in repayment, do not require a separate repayment vehicle, and can be a strong alternative to equity release plans. They last until the end of life, with favourable early repayment terms.
Do I need to involve my family in my equity release decision?
Yes, it's essential to include your family in your decision-making process and seek appropriate legal advice to ensure everyone is aware of the implications.
Can I use equity release to pay off an existing mortgage?
Yes, the funds obtained through equity release can be used to pay off your existing mortgage, among other uses like home improvements or boosting income.
What protections are in place for equity release plans?
Ensure your broker and any plan you accept comply with the Equity Release Council's terms and conditions, providing you with a tier of protection.
Is the interest on equity release paid monthly?
Repayment methods for equity release vary by lender. Some allow monthly or periodic interest payments, while others 'roll up' the interest to be collected upon death or entry into long-term care.
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Phone: 07785 954074
Address: 2 Kingsbroom Court, Kingswood, Maidstone, England, ME17 3ST
Email: kbl@financefactors.co.uk
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR OTHER LOANS SECURED AGAINST IT.
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