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McCoy Mortgages does not charge a fee for a residential mortgage or protection insurance advice and applications. Other charges by lenders or insurance providers may apply. Please ask for a personalised illustration. McCoy Mortgages is a trading style of Keith McCoy Associates Limited. Keith McCoy Associates Limited is authorised and regulated by the Financial Conduct Authority, FCA number: 450724. Registered office: Unit 77 Cariocca Business Park, Sawley Road, Manchester M40 8BB. 

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Retirement interest-only

(RIO) mortgages

If you are over 55, interest-only mortgages, some with no upper age, limit are now available. They’re new and called retirement Interest-only mortgages (RIO’s) and could give you an alternative to Equity Release. 

 

So what is a RIO mortgage?

 

Simply put, a RIO mortgage allows you to take out a mortgage for as long as you want and pay just the interest, making it comfortably affordable for many retired people.

 

They are available with terms of 40 years or more and no upper age limit. And as you only pay the interest, the outstanding capital part of the loan will be paid off whenever your property is sold.

 

Benefits of RIO's

  • ·Low monthly payments, you are only required to pay the interest charges

  • Flexibility, you can make overpayments if you want to 

  • There is no maximum age across many of these products, and interest rates can be lower than Equity Release

  • Money raised can be used for most purposes

  • Avoids interest charges rolling up each year and increasing your debt, as with Equity Release. Your mortgage balance, therefore, remains the same, potentially leaving more for your family when you die

  • Your mortgage can be cleared either with the sale of the property if you downsize, or when the last surviving borrower moves into long-term care or dies and the property is sold

  • If you are stuck with an existing interest-only mortgage which is coming to an end, you could consider switching to a RIO mortgage and extending the term as long as you want into your retirement.

What to be aware of

  • Unlike Equity Release where you have no payments to make, you must pay the interest each month 

  • You must show you have sufficient income in retirement to meet affordability rules. This usually means having a private pension or other investment income

  • For joint applications, each applicant should be able to afford the total repayment individually

  • Before entering into a long-term financial commitment you should speak to your family to ensure they understand the implications of borrowing into your retirement.