February 18, 2020
“Her name was RIO and she refinanced her plans”. Excuse us, we’re getting a little excited about one of the newest additions to the mortgage deal collection. Welcome the RIO, who could soon become your next good reason to dance on the sand.
If you have been finding it difficult to secure a standard residential mortgage, all is not lost. You may be eligible for what’s known as a RIO. Unfortunately this doesn’t quite mean a long haul flight is on the cards, but is something more akin to an interest only mortgage. Retirement Interest Only mortgages are one of the newer products on the market, allowing you to borrow against your property and only pay back the interest.
While you may have taken out an interest only mortgage pre credit crunch, you might not have had a secure plan in place to pay back the capital at the end of your agreement. The majority of RIOs only require you begin repayments when you sell up, move into residential care or, ahem, pop your rather on trend clogs. There are other RIOs that require you to begin repayments after a certain number of years, or once you reach a particular age.
The amount you can borrow is based on your retirement income and your loan to value ratio. In comparison to a capital repayment basis you will usually be able to borrow less with an interest only basis, but the benefits are seriously worth considering with a RIO. We can discuss in further detail what the best option is for you and perform an affordability check to help find you the best deal.
Unlike standard residential mortgages, you only have to prove you can afford the interest payments with an RIO, which is good news for most of us. You will also find some retirement interest only packages that offer the option of paying back capital, meaning a larger percentage of your house will be inherited by the lucky ones in your life. Taking out a RIO mortgage means you won’t have to downsize in your later years to pay off the building interest and capital.
As a fairly new product, Heron Financial are amongst the first companies to offer this service and have a full range of options to suit your specific needs. Why not have a chat with us to discuss whether you’re eligible and which RIO package would be best for you.
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