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Apply for a retirement interest-only mortgage with L&C

If you’re approaching retirement, or are already retired and looking for a mortgage, L&C can help you decide whether a retirement interest-only (RIO) mortgage could be the right option for you.

Demand for retirement interest-only mortgages has grown in recent years, and there is now a much wider range of options to choose from. At L&C we can compare the best retirement interest-only mortgages on your behalf and explain which deals you’re likely to be eligible for. Once we’ve found the right mortgage deal for you, we’ll guide you through the application process from start to finish.

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Retirement Interest Only Mortgages Explained

If you’re approaching retirement, or are already retired and looking for a mortgage, a retirement interest only mortgage (RIO mortgage) could be the right option for you.

Retirement interest only mortgages work in a similar way to a standard interest only mortgage, in that you pay back the interest on your mortgage every month, but with this type of mortgage, there is typically no end date and no age restrictions. Capital borrowed is only paid off when the property is sold, usually when the mortgage holder moves into long-term care or dies.

This is something to consider if you’re weighing up a retirement interest only mortgage vs. equity release. Lifetime mortgages are a type of equity release scheme, where no monthly payments are made. This means the interest rolls up over time and must be repaid along with the capital borrowed when you come to sell your home.

Because you only pay the interest every month, payments for a RIO mortgage are usually lower than if you were to repay some of the capital plus the interest. That means it could be a great option if you’re looking for greater financial flexibility in your retirement, as you don’t have to make the larger monthly payments that would apply to a repayment mortgage.

However, the capital does need to be repaid when your property is sold, which could reduce the value of any inheritance you want to leave, so you’ll want to weigh up the different options before making your decision.

Retirement Interest Only Mortgage Process

As with any other type of mortgage, the first step is to speak to a mortgage broker like L&C. We offer free mortgage advice, and will let you know whether you’re a suitable candidate for mortgages for the over 60s, and what you need to prepare for your mortgage application. We’ll also compare retirement interest only mortgages from a range of RIO mortgage providers to ensure you’re getting the best deal on the market.

Then, we’ll help you through the application process from start to finish. Our expert team is always on hand to help out with any questions you might have.

Retirement Interest Only Mortgage Eligibility Criteria

RIO mortgage criteria vary from lender to lender, but in general, all will require that you have a good credit history and plenty of equity in your property. Getting a mortgage on a pension can be trickier than when you’re in work. You must also be able to demonstrate that your retirement income can comfortably cover your monthly interest payments and any other outgoings you have. You should be prepared to show evidence of your income and outgoings when applying for your mortgage.

Most RIO mortgage providers will have an age bracket which you must be within when applying for your mortgage. This is usually between 55 and 80. Most lenders will also have a maximum loan-to-value ratio, which is often around 55% but again, varies between lenders.

How much you can borrow and the RIO mortgage rates on offer to you will depend on the value of your home as well as the lender’s affordability assessment. A RIO mortgage may not always be the best option for you. If you’re considering buying a rental property, for example, then you may instead look for a buy to let mortgage for over 60s.

Finding the best Retirement Interest Only Mortgage Deal

We recommend speaking to a mortgage advisor to find the best retirement interest only mortgage rates, as we can often unlock deals that you wouldn’t be able to find otherwise.

If you want to discuss the options that might be available to you, get in touch with L&C today. Our expert team will conduct a RIO mortgages comparison and find you the best deal to suit your needs.

Retirement Interest Only Mortgage Repayment Plan

With a retirement interest only mortgage, you only pay back the interest on your loan every month. That means the full amount of the mortgage is due to be repaid when you sell your home, which is usually at the point of moving from your home into full-time care, or when you die.

Apply for a Retirement Interest Only Mortgage with L&C

Demand for retirement interest only mortgages has grown in recent years, and there is now a much wider range of options to choose from. At L&C, as a whole of market mortgage broker, we offer free mortgage advice to help you find the best deal to suit your circumstances. We can compare the best retirement interest only mortgages on your behalf and explain which deals you’re likely to be eligible for. Once we’ve found the right mortgage deal for you, we’ll guide you through the application process from start to finish.

Retirement interest-only mortgage FAQs

Does age affect mortgage approval?

With most standard mortgage types, mortgage lenders are stricter the older you get, and you’re more likely to be offered a shorter mortgage term if you’re older than if you’re a younger homebuyer. First time buyers, for example, might have a 25-year repayment term on their mortgage, but if you’re over 60, you might only be offered 5 or 10 years. While many standard mortgages impose age limits of 65 or 70, with retirement interest only mortgages, there’s usually no age limit. Instead, you keep paying the interest on your mortgage until the property is sold.

Can I get a mortgage on a retirement property?

If you’re considering moving into a retirement property, you might be wondering whether it’s possible to get a mortgage for it. The answer is yes, although many mainstream banks and building societies don’t offer this type of mortgage so your choices may be restricted. Your best option is to consult a specialist mortgage broker like L&C. We have access to many deals not available on the high street, so we can help you to find the right specialist retirement mortgage for your circumstances.

How do retirees get a mortgage?

Retirement interest only mortgages are specifically designed for retirees, helping them to buy a property when they might not be accepted for standard mortgages. Some lenders set age restrictions on when mortgages must be paid back in full, but retirement interest only mortgages are open-ended, allowing you to pay back the interest on your mortgage until your property is sold. It’s important to note that you’ll still need to prove that you can afford the mortgage, either through your retirement income or the equity you already have in your home, and that you may need to pass affordability checks.