Q: How are mortgages for older borrowers different to Retirement Interest Only (RIO) loans?
A: Some customers may be eligible for both products and have the choice around which is most suitable for their needs. Starting with affordability, with a RIO mortgage, each applicant must demonstrate that the mortgage is affordable throughout the term, whereas affordability for our Older Borrower range is assessed on joint income.
Q: Any other key distinctions between the products?
A: The second difference is the repayment strategy. A RIO mortgage is normally repaid when the property has been sold to repay the mortgage following the occurrence of a life event compared to our older borrower product which has a term end date and is suitable for clients who have a repayment strategy such as downsizing to a smaller property in the future. A RIO mortgage therefore enables clients to stay in their home for longer.
Q: Any other advice tips for clients considering this sort of product?
A: It completely depends on client circumstances, if the client has no plans to sell their home in the future but they’re looking for a mortgage, then the RIO may be the one for them. If however, they want an interest only mortgage and have future plans to downsize then it’s a great opportunity for them to look at Later Life Mortgages.
Robinson said: “We really welcome the innovation in the market and it seems to be the building society sector that is leading the way in embracing new opportunities for later life lending. The key thing is to ensure we make products straightforward and accessible for intermediaries and their clients so it’s clear what the benefits for their clients across a wide range of lenders.”
