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Are you thinking of borrowing into retirement? There are various ways to do this, including Retirement Interest-Only mortgages.
The team at Saga Mortgages, provided by Tembo, are here to help our customers who want to explore Retirement Interest-Only mortgages and other later life lending options, so you can discover the best option for you and your family.
Retirement Interest-Only mortgages, often abbreviated to RIO mortgages, are a type of mortgage loan designed specifically for retirees or older individuals who are looking to release equity from their homes or manage their finances in retirement.
These mortgages allow you to borrow money against the value of your property while making interest-only payments throughout the mortgage term.
It’s important to know that as with any mortgage, a loan that is secured against your home; if you cannot keep up with your monthly payments, your home may be repossessed.
Whether you have questions about Retirement Interest-Only mortgages or just want to find out more, the expert team are on hand to help.
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Retirement Interest-Only mortgages are normally only available to borrowers over the age of 55 or 60, who live in or are buying a property in England, Wales or Scotland. Your eligibility will depend on the lender’s criteria, which vary from provider to provider.
Depending on your affordability, with a Retirement Interest-Only mortgage you could borrow up to 85% of your home’s value, although some lenders may offer lower than this.
Your income will also be taken into consideration, as well as what your expenses are and your credit score.
No, despite its name you do not have to be retired to apply for a Retirement Interest-Only mortgage. You can be fully retired, working, or semi-retired.
There are alternatives to Retirement Interest-Only mortgages you can consider. For some borrowers, a standard interest-only mortgage may be more suitable as this could allow you to access lower rates, making your monthly costs more affordable.
Borrowers who have a generous pension income and want to remortgage their property, but exceed the maximum age of a traditional mortgage could also consider a Retirement Capital and Interest (RCI) mortgage. This works like a standard repayment mortgage because it has a fixed end date and you repay the debt as well as the interest, but it has a flexible upper age limit based on your life expectancy.
If you want to release money to supplement your children or grandchildren’s house deposit, you could also consider a Deposit Boost or Savings as Security mortgage. If you are under the age of 60, another way you could help your loved ones get their first home is by becoming their guarantor through an Income Boost.
For others, a lifetime mortgage, or equity release product may be more suitable.
The main difference between a Retirement Interest-Only and standard interest-only mortgage is that a Retirement Interest-Only mortgage has no end date, while a standard interest-only mortgage has a mortgage term that will end after a certain number of years, normally when you reach 80 or a similar age.
Because Retirement Interest-Only mortgages have no end date, this allows you to borrow into later life.
However, you pay a premium for this, which means Retirement Interest-Only mortgages tend to have higher mortgage rates than standard interest-only mortgages. So sometimes it is more affordable to choose a standard interest-only mortgage instead of a Retirement Interest-Only set up.
The expert team at Saga Mortgages will look at both options to work out which is the most suitable option for you.
When assessing your income for a Retirement Interest-Only mortgage, lenders will usually consider a diverse range of income sources. This typically includes earnings from a permanent job, self-employment, pensions, rental income as well as others.
The key is to ensure you can evidence these income sources to the lender, for example supplying bank statements and payslips.
Yes, it is possible to move house if you have a Retirement Interest-Only mortgage, which is good news if you plan on downsizing or moving in the future.
Yes, it is possible to remortgage if you have a Retirement Interest-Only mortgage. But if you switch lenders or want to increase the size of your mortgage loan, you will have to undergo another full affordability assessment to determine if you can remortgage.
If you do not pass the assessment, the lender will not approve your remortgage. Working with experts in mortgages like the Saga Mortgages team can help you avoid this happening, as they’ll know which lenders are most likely to approve your application.
Although Retirement Interest-Only mortgages do not have an end date, it is possible for you to repay the mortgage loan early through selling the property. However, some lenders may let you make capital repayments, but this is not guaranteed.
Similar to a normal residential mortgage, if your repayments become unaffordable your lender will try their best to help you find a way to manage your costs. However, if you still cannot afford your repayments as a last resort the lender may repossess your property.
Saga Mortgages is a service provided by Tembo, available exclusively to Saga. You’ll benefit from their award-winning advice from a friendly, experienced team of mortgage professionals, who are available 7 days a week.
They’ll search all the available options to find the best option and mortgage rate for you, including specialist products bespoke to Saga Mortgages.
The Saga Mortgage service enables you to book an appointment with Tembo's award-winning mortgage advisors. Simply complete our online fact find and, if you’re eligible, you’ll be directed to book an appointment.
The team is available 7 days a week, ready to answer any questions you may have.
With Saga Mortgages, you will have access to mortgage advice through our partner Tembo. Their award-winning mortgage advisors will search over 20,000 mortgage products and over 100 lenders to find the most suitable and best priced deal for you.
This includes all the high-street lenders you’ll be familiar with, like Nationwide, Halifax, Lloyds, Barclays and HSBC, as well as smaller, specialist lenders like Livemore and Generation Home.
All mortgage advice through Saga Mortgages is provided by Tembo Money Limited, who are regulated by the Financial Conduct Authority (FCA) under the registration number 952652. Their team of award-winning mortgage advisors are experienced in providing mortgage advice, including guidance on remortgaging, family supported mortgages and later life lending.
Once all the people named on the mortgage have died, the property will be sold and the funds will be used to settle the loan. Alternatively, the loan could be repaid through other means by the beneficiaries of the will.
If one person dies, but the other mortgage holder(s) are still alive, then they would continue to repay the interest if possible. The mortgage affordability is calculated on the lowest earner’s income to avoid situations where the surviving mortgage holder cannot afford the loan.
However, if circumstances have changed and it is no longer affordable, you should contact your lender as soon as possible - ideally before missing a single payment - to discuss what options are available. As a last resort, this could mean selling the home to repay the loan.
Saga is a registered trading name of Saga Personal Finance Limited, which is registered in England and Wales (company number 3023493). Registered office 3 Pancras Square, London, N1C 4AG. Saga Personal Finance Limited is authorised and regulated by the Financial Conduct Authority under the registration number 178922. Tembo Money Limited (12631312) is a company registered in England and Wales with its registered office at 18 Crucifix Lane, London, SE1 3JW. Tembo is authorised and regulated by the Financial Conduct Authority under the registration number 952652. Tembo Money was awarded Best Mortgage Broker at the British Banking Awards in 2022 and 2023.
Saga have partnered with Tembo to help you remortgage, buy a new home or simply help a loved one.