What is a Retirement Interest Only Mortgage?

A retirement interest-only mortgage is a loan for life for the over 55’s, secured on your main residence, where you’ll be required to make monthly payments until you enter long term care.   

We receive many enquiries from customers over the age of 55 who are considering a retirement interest only mortgage, here are a few examples: 

• Moving home to be closer to family/friends.  
• Downsizing but to a more expensive property.  
• Repaying debts and personal loans going into retirement.  
• Large purchase such as a motor home or boat.  
• Supplementing income due to retirement or drop in income.  
• Paying off an existing mortgage term that is ending soon.  
• Getting on the property ladder for the over 55s. 
• Divorce or separation solutions. 
• Helping family.  
• Buying a second or holiday home. 
• Something more complicated… 

The mortgage balance remains the same throughout the loan and it’s usually repaid from the sale of your property, an investment maturing, or via equity release in your later years when this is a better fit for your circumstances.  

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How does a retirement interest only mortgage work?

With a retirement interest only mortgage, you’ll retain ownership of your property in full and will be able to make inheritance provisions for your beneficiaries as you’ll know how much the loan amount is.  

A retirement interest only mortgage can be used to purchase a new property, repay an existing mortgage that is ending, or release tax free cash from your home.  

With a retirement interest only mortgage, the amount you owe stays the same providing you meet all the monthly payments, unlike a lifetime mortgage where interest can roll up. 

The alternatives to a retirement interest only mortgages are typically, traditional mortgages that run into retirement and equity release mortgages.  

Nowadays, there is a good range of solutions with some excellent features available to help the over 55’s with their mortgage needs.  You may wish to consider some over 50s life insurance options to run alongside your mortgage to ensure you mortgage is repaid should you die.  

Speak to a Mortgage Advisor

Our later life mortgage advice team will consider your personal situation and recommend the best and most cost-effective way forward for you.  Rest assured, we’re an independent broker therefore, we can offer advice on the full range of lending solutions for you, saving you both time and money.