Retirement Interest Only Mortgage

• Use the money however you want

You can spend it in all sorts of ways. This includes home improvements, helping children buy their first property or supporting grandchildren with their education. If you give the money away, they may need to pay inheritance tax in the future. There are few restrictions on how you spend the money. You can even pay off an existing mortgage.

• Interest is payable each month

The interest due is payable by you in full each month. In this way, you always know how much you owe.

• There’s no fixed term

You don't have to repay the loan on a specific date. It’s repaid on your death or when you move permanently into long-term care. At this point, the property is sold and the loan repaid. If you take out the loan with someone else, the property isn’t sold until both of you have either died or moved permanently into long-term care.

• The interest rate doesn’t vary

The interest rate is fixed throughout so there are no surprises. You’ll pay the same amount every month.

• You can pay more to reduce how much you owe

If you want to pay off more than the interest due each month, you can make overpayments from time to time. In this way, you’ll reduce how much you owe even further. So long as any overpayments don’t exceed our limits, there are no charges.

• You can still move home

The new home is subject to our usual lending criteria. In other words, assuming it’s a property we would be happy to lend against, you can move home.

• Am I eligible?

You should be 55 or over and living in, or buying your own home, in England, Wales or mainland Scotland.  You should be confident you can pay the interest each month now and in the future. The minimum loan you can apply for is £10,000 and your property must be worth £70,000 or £100,000 for flats, maisonettes, ex-council, ex-housing association or ex-Ministry of Defence properties.

The actual loan amount is determined by an affordability assessment up to a maximum of 60% of your property value. Based on your employed income (up to 8.5x) and/or retirement income (including retirement income yet to be earned) of lowest earner.

• What happens if I have an existing mortgage?

A Retirement Interest Only Mortgage can be used to repay an existing mortgage. What’s more, a Retirement Interest Only Mortgage doesn't have to be repaid until you die or permanently move into long-term care.

If you have an existing mortgage, you will need to use the Retirement Interest Only Mortgage to pay it off and you may have to pay an early repayment charge to your existing lender.

If you haven’t got an existing mortgage, you can still apply and use the money for something else.

• How does this compare to the Optional Payment Lifetime Mortgage?

A Retirement Interest Only Mortgage commits you to pay the interest each month. This means the amount you owe doesn’t increase over time. If you’re not sure you can commit to this, consider the Optional Payment Lifetime Mortgage. This gives you the option to pay off some of the interest, but you don’t have to. Any unpaid interest is added to the loan.

• How flexible is a Retirement Interest Only Mortgage?

You can repay more than just the interest on the loan to reduce how much you owe even further. It’s also possible to still move home with a Retirement Interest Only Mortgage. What’s more, you can apply for a further loan against your property in the future.

• Missing interest payments

If you miss monthly interest payments we’ll always try and help. If we can’t resolve the situation, as a last resort your home may be repossessed.

• Early Repayment Charges

If you repay your Retirement Interest Only Mortgage early, or pay more than the overpayment limits, there may be an Early Repayment Charge.

• Moving home

You can move home, and transfer the loan as long as the new property meets our lending requirements. If the new property is worth less than your current home, you may have to pay back part of your mortgage.

• Means tested benefits

If you take out a Retirement Interest Only Mortgage it could affect any means-tested benefits or pension credit you receive.

• Monthly Council Tax Payment;
• Annual salary (average of the last 2 years profits/earnings for self-employed);
• Annual guaranteed bonus, overtime and commission;
• Income from investments such as buy to lets (average over the last 2 years);
• Pension pot value for Self-Invested Personal Pension, Defined Contribution or Personal Pension;
• Annual State Pension;
• Annual Defined Benefit or Annuity (please advise if the Annuity Pension is escalating or not);
• Any spousal benefits connected to all private pensions;
• Details of whether your pensions are currently being taken, or to be taken in the future
• Any monthly credit commitments & committed expenditure (no need to include normal household bills) for individuals and joint.