Warning: THE MORTGAGED PROPERTY (WHICH MAY BE YOUR HOME) MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Retirement Interest Only Mortgages

Enjoy your retirement, your way

Here at Leeds Building Society we’ve built on our experience and expertise in interest only lending to develop a range of Retirement Interest Only (RIO) mortgages.

Here’s how RIO works

With no set end date, RIO is a flexible option which can be used to meet a wide range of later life needs. That might include, for example:

  • Getting round to those home improvements you’ve been putting off
  • Giving your children or grandchildren a helping hand on to the property ladder
  • Enhancing your income to support your lifestyle in retirement.

You’ll need to make monthly payments for the life of the mortgage, which will consist only of interest on the total amount you’ve borrowed. We’ll assess your ability to do this based on your current income and future income in retirement.

The balance will then be paid back when you experience what’s referred to as a ‘life event’, such as:

  • Death
  • Moving into long-term care
  • Using another property as your main residential home
  • Sale of the property, without transferring the loan.

Where there are joint borrowers, this will be triggered by the surviving borrower or last borrower living in the home experiencing the life event.

What you need to know before you apply…

To make sure that you’re right for RIO, take a look at the following key criteria:

  • You must be aged 55 to 80 to apply
  • We’ll allow up to two borrowers on the mortgage
  • We’ll lend up to 55% of the value of the property (LTV)
  • There’s no maximum term or maximum age at which you’d need to repay the mortgage
  • This mortgage is only available on an interest only basis
  • A RIO mortgage is available if you’re buying or remortgaging.

How does RIO compare with other types of mortgages?

To help you understand how RIO works in comparison to some other later life options, take a look at the following table.

 

 Leeds Building Society Standard Interest Only mortgageLeeds Building Society RIO mortgageInterest roll-up equity release mortgage
Is there a fixed repayment term? Yes No
The loan is usually repaid when you experience a life event, such as death or moving into long term care.
No
The loan is usually repaid when you experience a life event, such as death or moving into long term care.
Is there a maximum age at term end? Yes
The maximum age at the end of your mortgage will be your stated retirement age or 70 years, whichever is earlier.
No No
Will I have to make monthly payments? Yes Yes No
Is the interest rolled-up?* No No Yes
How will I repay the full amount I’ve borrowed? There are a number of options available, including sale of the property, sale of another property, and using savings, pensions or investments. Usually using the proceeds from the sale of the property.** Usually using the proceeds from the sale of the property.
How is the maximum borrowing amount decided? The borrowing amount is based on your ability to afford the monthly mortgage interest payments and is subject to a maximum LTV of 60%.

Your income and expenditure will be assessed.
The borrowing amount is based on your ability to afford the monthly mortgage interest payments and is subject to a maximum LTV of 55%.

Your income and expenditure will be assessed.
The borrowing amount is based on the LTV, and is determined by your age at application.

 * Where the interest is added to the loan. The amount borrowed, including the rolled-up interest, is then repaid when your home is sold.

** If there is any shortfall from the sale proceeds, you or your estate (as applicable) will still need to repay this shortfall. 

What do you need to consider?

There are a few things you’ll want to have a think about before applying:

  • It’s important to be aware that your ability to keep up with the mortgage payments may be affected if your income reduces, your outgoings increase or interest rates rise
  • In some circumstances, a lifetime mortgage (e.g. an equity release mortgage) may be more appropriate than a RIO mortgage
  • We recommend you take advice on whether a RIO mortgage could impact your tax position and entitlement to any benefits if you’re borrowing funds to release money from your home. Appropriate sources could include HM Revenue & Customs, the Pension Service, the Citizens Advice Bureau and/or an Independent Financial Advisor (IFA)
  • As a RIO mortgage is a long term commitment, you should consider how this mortgage may impact your ability to afford any potential future needs, like the costs of any additional care you may need in your lifetime
  • You might want to consider a Lasting Power of Attorney (LPA). An LPA allows you to choose someone to help you make decisions or to make decisions on your behalf in the event that you’re unable to do so
  • The proceeds from the sale of your home will be used to repay your mortgage. This may reduce the value of your estate and the amount which your beneficiaries may inherit. You may wish to talk to your family, or others, who may benefit from your estate in your decision to take out this mortgage
  • The value of your home may fall. If the value of your home is less than the amount of the loan outstanding when it’s due to be repaid, the difference will still need to be repaid by you or your estate.

It’s a good idea to consider taking independent legal advice before taking this mortgage, to make sure you fully understand the mortgage terms and any possible future implications.





Our RIO range

Take a look at our RIO mortgage range below. We have a range of fixed rate products of up to 10 years.

 

2 Year Retirement Interest Only Fixed Rate Mortgage

Initial rate fixed up to and inc. 30/09/21Then the Society's SVR less 1.25% discount up to and inc. 30/09/24, (currently)Then the Society's SVR thereafter, (currently)Overall cost for comparison (APRC)Max LTVProduct Fee
3.34% 4.44%5.69%5.4%55%£999 View
Max loan amount £1,250,000
3.64% 4.44%5.69%5.3%55%£0 View
Max loan amount £1,250,000

Cashback 2 Year Retirement Interest Only Fixed Rate Mortgage

Initial rate fixed up to and inc. 30/09/21Then the Society's SVR less 1.25% discount up to and inc. 30/09/24, (currently)Then the Society's SVR thereafter, (currently)Overall cost for comparison (APRC)Max LTVProduct Fee
3.65% 4.44%5.69%5.4%55%£999 View
Max loan amount £1,250,000 / Min loan amount £50,000 / £500 Cashback upon completion
RATES CORRECT AS AT 10 june 2019

Warning: Your home may be repossessed if you do not keep up repayments on your mortgage.

Representative Example

A mortgage of £80,000.00 payable over 25 years initially on a fixed rate for 2 years at 3.65% and then a 1.25% discount on our current Standard Variable Rate of 5.69% for 3 years and then on our current Standard Variable Rate of 5.69% for the remaining 20 years would require 24 monthly payments of £243.33, 36 monthly payments of £296.00 and 240 monthly payments of £379.33.

The total amount payable would be £188,570.00 made up of the loan amount plus interest of £107,536.00 and application fee £0, product fee £999, valuation fee £0, chaps fee £35.

The overall cost for comparisons is 5.4% APRC representative.

This representative example assumes a mortgage completion date on the 1st day of a calendar month.

The above representative example is for illustration purposes only and may vary depending on your personal circumstances.

  • A product fee is payable on application but is refundable should the mortgage not complete.
  • 10% capital repayments are allowed each year without incurring an Early Repayment Charge.
  • Tapered Early Repayment Charges apply up to and including 30 September 2021.
  • Free Standard valuation up to £999.
  • Interest calculated daily.
  • Sale of the mortgaged property is the only repayment strategy accepted.
  • A mortgage exit fee of £199 will apply if the loan is repaid in full before the mortgage ends.
  • This product is only available on an interest-only basis.
  • No maximum term.
  • Maximum loan £1,250,000.

5 Year Retirement Interest Only Fixed Rate Mortgage

Initial rate fixed up to and inc. 30/09/24Then the Society's SVR thereafter, (currently)Overall cost for comparison (APRC)Max LTVProduct Fee
3.62% 5.69%5.2%55%£999 View
Max loan amount £1,250,000
3.83% 5.69%5.2%55%£0 View
Max loan amount £1,250,000

Cashback 5 Year Retirement Interest Only Fixed Rate Mortgage

Initial rate fixed up to and inc. 30/09/24Then the Society's SVR thereafter, (currently)Overall cost for comparison (APRC)Max LTVProduct Fee
3.74% 5.69%5.2%55%£999 View
Max loan amount £1,250,000 / Min loan amount £50,000 / £500 Cashback upon completion
RATES CORRECT AS AT 10 june 2019

Warning: Your home may be repossessed if you do not keep up repayments on your mortgage.

Representative Example

A mortgage of £80,000.00 payable over 25 years initially on a fixed rate for 5 years at 3.74% and then on our current Standard Variable Rate of 5.69% (variable) for the remaining 20 years would require 60 monthly payments of £249.33 and 240 monthly payments of £379.33.

The total amount payable would be £186,035.00 made up of the loan amount plus interest of £106,000.00 and application fee £0, product fee £999, valuation fee £0, chaps fee £35.

The overall cost for comparison is 5.2% APRC representative.

This representative example assumes a mortgage completion date on the 1st day of a calendar month.

The above representative example is for illustration purposes only and may vary depending on your personal circumstances.

  • A product fee is payable on application but is refundable should the mortgage not complete.
  • 10% capital repayments are allowed each year without incurring an Early Repayment Charge.
  • Tapered Early Repayment Charges apply up to and including 30 September 2024.
  • Free Standard valuation up to £999.
  • Interest calculated daily.
  • Sale of the mortgaged property is the only repayment strategy accepted.
  • A mortgage exit fee of £199 will apply if the loan is repaid in full before the mortgage ends.
  • This product is only available on an interest-only basis.
  • No maximum term.
  • Maximum loan £1,250,000.

10 Year Retirement Interest Only Fixed Rate Mortgage

Initial rate fixed up to and inc. 30/09/29Then the Society's SVR thereafter, (currently)Overall cost for comparison (APRC)Max LTVProduct Fee
3.99% 5.69%5.0%55%£999 View
Max loan amount £1,250,000
4.19% 5.69%5.0%55%£0 View
Max loan amount £1,250,000

Cashback 10 Year Retirement Interest Only Fixed Rate Mortgage

Initial rate fixed up to and inc. 30/09/29Then the Society's SVR thereafter, (currently)Overall cost for comparison (APRC)Max LTVProduct Fee
4.09% 5.69%5.0%55%£999 View
Max loan amount £1,250,000 / Min loan amount £50,000 / £500 Cashback upon completion
RATES CORRECT AS AT 10 june 2019

Warning: Your home may be repossessed if you do not keep up repayments on your mortgage.

Representative Example

A mortgage of £80,000.00 payable over 25 years initially on a fixed rate for 10 years at 4.09% and then on our current Standard Variable Rate of 5.69% (variable) for the remaining 15 years would require 120 monthly payments of £272.67 and 180 monthly payments of £379.33.

The total amount payable would be £182,034.00 made up of the loan amount plus interest of £101,000.00 and application fee £0, product fee £999, valuation fee £0, chaps fee £35.

The overall cost for comparison is 5.0% APRC representative.

This representative example assumes a mortgage completion date on the 1st day of a calendar month.

The above representative example is for illustration purposes only and may vary depending on your personal circumstances.

  • A product fee is payable on application but is refundable should the mortgage not complete.
  • 10% capital repayments are allowed each year without incurring an Early Repayment Charge.
  • Tapered Early Repayment Charges apply up to and including 30 September 2029.
  • Free Standard valuation up to £999.
  • Interest calculated daily.
  • Sale of the mortgaged property is the only repayment strategy accepted.
  • A mortgage exit fee of £199 will apply if the loan is repaid in full before the mortgage ends.
  • This product is only available on an interest-only basis.
  • No maximum term.
  • Maximum loan £1,250,000.
  • Extra help and guidance

    If you want help and support with your application call a Mortgage Assistant

    03450 50 50 62(press option 2)

  • Talk to an expert now

    When you're ready to apply for a mortgage, call to request to speak to a Mortgage Consultant

    03458 48 00 26 (press option 1)