Why should your age be the ultimate factor in determining whether you can have a mortgage? 
 
Whether approaching retirement or already in retirement, many older people need innovative financial solutions to combat shortfalls in pension provisions, pay off debt and manage the escalating cost of everyday living. 
 
So many older people are asset-rich and income-poor. 
 
Retirement Interest-Only mortgages (RIO) are interest-only mortgages with no set end-date and they have been designed to help older borrowers who: 
 
Want to fund lifestyle choices and retirement planning. A RIO can help with anything from home improvements to financial planning. 
 
Want to repay unsecured debt or their existing interest-only mortgages and are able to continue paying mortgage interest for the life of the RIO. 
 
Want to just achieve greater financial freedom. They may still be working but can use RIO as a means of releasing equity in order to purchase a holiday home or give children / grandchildren a helping hand onto the property ladder. 
 
In all instances, a RIO may help older borrowers achieve their individual goals while also helping them to protect equity in their home and leave an inheritance for loved ones. 
 

Later Life Lending’ is not just about Equity Release! 

A growing number of older people fall outside of the typical high street lending criteria. 
 
They are becoming more aware of how far their incomes will stretch throughout retirement and for some of them, options to increase those incomes are becoming much more attractive. 
 
The 2019 Retirement Lending report, prepared by the Centre for Economics and Business Research and undertaken for ‘more 2 life’ showed that income levels are continuing to fall with age; many 65-74 year olds are estimated to have just £3,100 left at end of the year to save, invest, or use for future spending. It adds credence to the belief held by almost half of over 55s (48%) that they do not have enough savings to cover an unexpected £5,000 bill. 
RIO can offer peace of mind. It can help with numerous capital-raising opportunities: 
 
You may want to release equity from your home without taking an Equity-Release mortgage, where the cost of interest rolls up 
 
You may want to help children onto the housing ladder 
 
You are approaching the end of a mortgage term, with an interest-only mortgage but insufficient funds to pay off the balance owed 
 
You may want to purchase your ‘dream home’ but cannot buy it outright 
 
You may want to re-mortgage the remaining mortgage balance in order to reduce the interest rate and the monthly payments 
 
You may endure a reduction in income, following bereavement / divorce or be struggling to meet your current mortgage repayments, due to illness 
 
You may want to buy a holiday-home 
 
You may want to invest in a buy-to-let property 
 
You may want to adapt or refurbish your home 
 
Lending choices have historically been hindered by age restrictions and lenders’ affordability assessments. Opportunities and product innovation, however, are making ‘Later Life Lending’ more prominent in the marketplace. We have seen mainstream lenders adapt their later life criteria and increase maximum lending ages. At the same time, we have seen specialist later life lenders moving into the ‘standard’ mortgage advice space, by developing more flexible products for interest-only customers. 
 

RIO: general mortgage terms 

Many of those lenders do not apply a maximum age or maximum term to their RIO products. 
 
The maximum loan amount usually falls within the range of 40% to 60% of a property’s value (a small number of lenders will consider higher a higher loan-to-value). 
 
The amount that can be borrowed will be based on the borrower's ability to maintain these payments throughout the life of the mortgage. For joint applicants, affordability is assessed jointly and individually. 
 
Affordability is usually based on pension income but some lenders will consider other income, if plausible and sustainable. 
 
One lender offers an ‘Offset’ facility whereby funds can be drawn-down as required. 
 
Usually, a ‘Lasting Power of Attorney’ is not a requirement but some lenders will offer specific products or discounted interest rates, if a registered LPA is in existence 
 
 

Financial freedom in retirement 

A RIO, therefore, can deliver the most suitable outcome for older borrowers and their families. It can enable them to draw on their housing-wealth and achieve a better standard of living in their ‘golden years’. 
 
For more information on Later Life Lending and RIO, please contact... 
 
Nigel Osgood, Independent Mortgage Adviser 
 
E: nigel@afpmortgages.co.uk 
T: 01628 594433 
 
 
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE 
 
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