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    • Bank of England January 2020 base rate meeting
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    • Bank of England cuts the base rate to almost zero
    • Buying, selling and moving home during the pandemic
    • Tightening credit conditions in the mortgage market
    • One in seven takes mortgage payment holiday
    • The property market reopens for business
    • Lenders reintroduce 90% mortgage deals
    • Turbulent times for lenders
    • Easing out of lockdown
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    • UK economy may need further stimulus says the Bank of England
    • Your guide to mortgage valuations
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  • Mortgages
    • Introduction
    • 1st Time Buyers Mortgage Guide
    • 1st Time Buyer & Help to Buy
    • What is a Buy to Let Mortgage?
    • Buy to Let Mortgage Advice
    • Flexible Mortgages
    • Interest Only
    • Remortgaging
    • Repayment
  • Protection
    • Introduction
    • Do I need Income Protection Insurance?
    • Income Protection Advice
    • Why do you need Life or Critical Illness Insurance?
    • Critical Illness & Serious Illness Cover
    • ASU / Redundancy
  • Life Insurance
    • Introduction
    • Term Insurance Policies
    • Endowment Policies
    • Family Income Benefit
    • Guaranteed 50 Plus Life Cover
    • Whole of Life
  • Conveyancing & Solicitors
  • Surveys and Valuations
  • General Insurance
    • Introduction
    • Buildings & Contents Insurance
    • Compare & Buy Online Now!
    • Landlord Cover
    • Rent Guarantee
    • Home Buyers' Protection
    • Home Emergency Cover
    • Commercial Insurance
    • Professional Indemnity
    • Public & Employers' Liability Insurance
  • Will Writing & Estate Planning
  • Other Loans & Services
  • Articles
    • Bank of England Rate Rise
    • Fee Free Mortgage Advice
    • Negotiating the best price for your new home
    • Freehold versus Leasehold
    • Why you need advice on mortgages
    • Ten terms first time buyers will want to know
    • Buying process and dealing with estate agents
    • Selling property and marketing options
    • Help to Buy or not Help to Buy: that is the question
    • New home or pre-loved?
    • Interested in interest only?
    • Are lifetime mortgages on the rise?
    • General Data Protection Regulation (GDPR)
    • Solicitors and conveyancers
    • Joint Borrower Sole Proprietor Mortgages
    • The 3% stamp duty
    • First-time buyer stamp duty relief
    • Offset mortgages: how they work and who they work for
    • Self-employed mortgages versus mortgages for those employed by others
    • Mortgages: debts versus deposits
    • House prices increase swiftest in North West compared to rest of UK
    • Transfer of Equity
    • 10 Pitfall Mortgages
    • Remortgages versus product transfers
    • Limited Company Buy-to-Let Mortgages
    • Retirement Interest Only (RIO) mortgages and the new residential option between normal Interest Only and Equity Release
    • 2019 and our rate of interest predictions
    • Brexit and the property market 2019
    • Potential benefits of using a broker
    • The mortgage market: lenders and their existing clients
    • Mortgages and Relationships
    • Robo Advice: is it right for you?
    • Cheaper rates versus cheaper fees
    • Why online mortgage comparisons can be so vastly different
    • Affordability Calculators
    • Cashback Mortgages
    • Government Rent a Room Scheme
    • Government Marriage Allowance
    • The property market continues to move; and the North West is looking good
    • England letting fees banned and how this may affect you
    • Top credit file definitions
    • Understanding your credit rating
    • BTL, LTB, HMO & holiday let terms explained
    • Offset mortgages: term and payment reduction options
    • November 2019 Bank of England base rate
    • The general election candidates for the Chorley Constituency
    • 2019 year-end mortgage lending market
    • 2019 year-end house prices
    • Can we expect sub 1% mortgagee deals?
    • How is Brexit likely to affect 2020 mortgages and house prices?
    • Interest rates in the UK, Europe and beyond
    • How the Great British Pound is faring against Euro and US Dollar
    • Help to Debt (HTD) – the importance of good advice when it comes to making borrowing decisions
    • Bank of England January 2020 base rate meeting
    • Lender Dual pricing: what it means to the mortgage seeker
    • Direct rates offered through lender portals can be costly?
    • Bank of England cuts the base rate to almost zero
    • Buying, selling and moving home during the pandemic
    • Tightening credit conditions in the mortgage market
    • One in seven takes mortgage payment holiday
    • The property market reopens for business
    • Lenders reintroduce 90% mortgage deals
    • Turbulent times for lenders
    • Easing out of lockdown
    • First-time buyer demand surges but options are limited
    • Stamp duty scrapped on homes under 500k
    • Competition watchdog investigates developers over mis-selling claims
    • UK economy may need further stimulus says the Bank of England
    • Your guide to mortgage valuations
    • Your guide to mortgage surveys
    • A quick guide to interest rates
    • A quick guide to inflation
    • The state of the housing market at the end Of 2020
    • What to look for in the 2021 property market
    • Price caps revealed for Help To Buy Scheme
    • Are 95% mortgages coming back?
  • Enquiry Forms
    • Mortgage Enquiries
    • Protection Enquiries
    • General Enquiries
  • Research Links
  • Our Associates
  • Home
  • Retirement Interest Only (RIO) mortgages and the new residential

Retirement Interest Only (RIO) mortgages and the new residential

option between normal Interest Only and Equity Release

With people living and working longer, it is inevitable that there will be more elderly homeowners who still have finance secured on their properties.

This does create its own mortgage genre and is the highest growing mortgage market in recent years. As a result, some lenders have tried to be more innovative in their options.

Lifetime mortgages, also known as equity release, have been around for some years now. However, as with all mortgages, recent regulation has made them very different to what was on offer at the turn of the century.

The principle is simple. If you are aged 55 or over, you can borrow a certain amount against your property, even if it’s to purchase a new one. No proof of income is required, and neither is a credit score.

How much can you borrow?

The amount a lender will loan is based purely on the valuation and the age of the applicant or applicants.

The older the applicant, the higher the percentage they can borrow, typically up to a maximum of 49% of the lender’s valuation of the property.

Traditionally, these types of mortgages had no monthly repayments; the lender would accumulate interest until the death of the last applicant.

However, in recent years, many options have developed, giving the homeowner the opportunity to potentially trade down and repay, to borrow more if needed and if available and to make repayments. Thus, not leaving the cost of the mortgage to be taken from their estate after their death.

This works very well for older retired homeowners who have agreed with their dependents that they are happy to do this or for those who have no dependents; because ultimately the cost of borrowing is added to the loan and is repayable upon the sale of the property, if the homeowner goes into care or upon death.

RIO mortgages

Some mortgage lenders will allow older borrowers to take a traditional interest only mortgage; potentially, up to age 90 though typically to age 75. This is based on their income whether it be pension income or any other form, and the repayments must be deemed affordable for the individual by the lender.

A credit score, valuation and proof of income are required.

RIO mortgages are a variation on traditional interest only mortgages and still require clients to pass affordability and credit checks.

They must still commit to monthly payments; however, these mortgages are specifically designed for those of retirement age and older. Therefore, where a lender on a traditional interest only mortgage may have set restrictions on age or other matters, RIO mortgages do not have an age restriction so long as the client fits the criteria already mentioned.

At the moment, less well known and niche lenders offer this facility, although major high street lenders are poised to get involved.

In fact, Nationwide are very close to entering this market.

Euxton can give advice on all types of mortgages so if you’d like to chat things through over a cuppa, why not pop in to see us?

Company address: Euxton Mortgage Market, Hearle House, 5 East Terrace Business Park, Euxton Lane, Chorley, Lancashire, PR7 6TB
T: 01257208946 F: 01257208947 Email: info@euxtonmortgagemarket.co.uk

Euxton Mortgage Market are independent mortgage advisers covering Euxton and the surrounding areas, including: Leyland, Bamber Bridge, Farrington, Lostock Hall, Longton, Adlington, Charnock Richard, Croston and Rivington.

Adrian John Wood, trading as Euxton Mortgage Market, is an appointed representative of HL Partnership Limited, which is authorised and regulated by the Financial Conduct Authority.

*Some of these products are not regulated by the Financial Conduct Authority.

Adrian John Wood is entered on the Financial Services Register (www.fca.org.uk/register) under reference 682490.

H L Partnership Limited is entered on the Financial Services Register (www.fca.org.uk/register) under reference 303397.

The information contained in this website is subject to UK regulatory regime and is therefore intended for consumers based in the UK.

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