RIOs are here to stay and that’s good news for borrowers and brokers alike.
Although RIO mortgages have faced some backlash since they launched in July 2018, it’s a product that’s here to stay and could give you access to clients you wouldn’t have considered in the past.
You probably know RIO mortgages are designed for older borrowers who may not be eligible for a traditional mortgage, but did you know you don’t need an Equity Release qualification to sell them?
This is a positive for those with and without the qualification as it gives you more options and allows you to truly support the mature borrower market.
Who is RIO for?
Don’t let the ‘retirement’ part put you off, retirement interest only mortgages aren’t just for people who’ve given up the day job in favour of slippers and sofa naps. If you have a potential customer aged 50 plus who wants to make the most of the equity in their home and is in a position to make interest payments each month, it could be the right option for them.
Alternatively, you might be faced with a client who’s at the end of an interest only mortgage term, with no repayment option in place other than the sale of their home, who’s just not ready to make that move. RIO could be the lifeline that keeps them in familiar surroundings.
If your customer is:
- Aged between 50 and 88
- Able to prove they can afford the monthly payments (pension, employed and self-employed income considered)
- At the end of an existing interest only mortgage
Speak to us to find out if a RIO mortgage would work for them – we pride ourselves on our flexible approach, something we hope makes your job easier.
RIOs provide certainty
Retirement has changed, and life seems less certain for this generation than the last. We decided we wanted to provide customers with security in later life, so we’ve introduced a new product called the Fixed-for-Life RIO which gives customers a fixed rate for the life of the mortgage.
With the mortgage available from 50 years old, it means customers could benefit from a fixed rate for 50 years or even more, safeguarding their retirement from interest rate rises for life. And, while the rate is fixed for life, the early repayment charges aren’t: they’re only applicable for the first eight years.
The Fixed-for-Life RIO is available from 4.35% with a £995 arrangement fee. A fee-free option is also available. If you’d like to find out more, you can take a look at the product documents, or find your local BDM to get in touch with. We’re always happy to hear from you.
Why wouldn’t I recommend equity release?
The difference between a RIO and equity release is the fact you can pay off the interest each month. With equity release you don’t pay anything until the house is sold and the interest is then rolled up.
If your customer is in a position to pay a monthly amount, RIO would gain less interest in the long term and leave more value in their property until the point they sell their home or switch to equity release.
What advisers think about RIO
As a lender, of course we think the addition of another product to the later-life lending space is a good thing, but what advisers think is far more important.
Two advisers who’ve worked with Hodge shared their thoughts on RIO:
Our RIO mortgage range is flexible and may suit your clients for a variety of reasons, if you’re unsure how to explain it to them, visit our Fixed-for-Life RIO customer page for more information.