woman thinking about Lifetime MortgagesMany people ask, what is the difference between a Retirement Interest Only Mortgage and a Lifetime Mortgages. At a quick first look, they both appear very similar, however, there are some very important differences.

With both products, the loan is repaid when you pass away or go into long-term care. Also, they can be used to improve your retirement income. There are, however, some important differences to consider when deciding the best option for you.

Below we have highlighted some of the main differences between the two.

Lifetime Mortgages

  • You can choose to stop making monthly payments and the plan will then add the interest to your loan. This is known as compound interest. You will then be paying interest on your interest.
  • As you have no monthly repayments to make you do not need to worry about falling into arrears and having your home repossessed.
  • The amount you can borrow is based on your age and the value of your home.
  • You have the right to remain in your home until you pass away or move permanently into long-term care.
  • Most Lifetime Mortgages come with a no “Negative Equity Guarantee”. In practice, this means that you or your estate will never owe more than the value of your home.

Retirement Interest Only Mortgage

  • Retirement Interest Only Mortgages are sometimes referred to as RIO’s.
  • You must make monthly repayments throughout the term of the mortgage or until it’s repaid in full.
  • The amount you can borrow is based on your ability to pay the monthly interest repayments. The lender will want to be sure that you can afford the repayments even if the interest rate goes up in the future.
  • Your property could be repossessed if you fail to make the monthly repayments.
  • If your home is worth less than the outstanding mortgage when it becomes repayable, you or your estate will have to repay any shortfall.

 

How we can help you make the right choice.

We are a firm of Independent Financial Advisers. This means that the advice we offer is unbiased. We will look at all the options from the “whole of market”.  Also, we have a team who specialises in later life lending, so why not arrange a meeting today.

We are a member of the Equity Release Council, so you can have complete confidence in your equity release adviser.

The initial meeting is at our expenses and is without obligation. Only when we fully understand your situation and what you are trying to achieve will we make our recommendation.  We can meet at a location and time that is convenient for you. This may be at your home or a weekend.

We have offices located at-Lifetime Mortgages calculator

  • Kettering, Northamptonshire
  • Stamford, Lincolnshire
  • Towcester, Northamptonshire

Additional our advisers live and make use of meeting rooms in-

So, why not contact us today and take the first steps to secure your financial future?

The equity release industry is regulated by the Financial Conduct Authority (FCA). Your equity release adviser is and must be authorised and qualified to advise you on these plans.

These products are lifetime mortgages or home reversion plans. Equity released from your home will be secured against it.

Equity Release Council logo