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What is a Retirement Interest-Only Mortgage?

What are the Benefits of an Interest-Only Mortgage?

Equity Release with a Retirement Mortgage

How Can Friends Capital Help?

Retirement Mortgage

Retirement Mortgages  are  aimed at older borrowers, usually over 55’s. A mortgage into retirement is similar to an average mortgage, with two key differences:

  • The loan is usually only paid off when you die, move into long term care or sell the house.
  • You only have to prove you can afford the monthly interest repayments.

retirement mortgage requires you to pass mortgage affordability checks and is based on your retirement income. This makes it generally  more difficult to secure a mortgage for retirement with the best rates available, without professional financial advice.  

Friends Capital can help you find the best retirement mortgage dealWe will review your personal circumstances and then search the entire market to ensure you get the best rates possible. Our advisors will then deal with all the paperwork, submit your mortgage application, liaise with your mortgage lender and solicitor, and ensure that your mortgage application is completed as quickly as possible. We can:  

  • Save you money on your mortgage deal 
  • Offer a free consultation 
  • Offer unbiased financial advice 
  • Save you time in your mortgage application 
  • Give you a dedicated account manager who is available to you through the process 

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What is a Retirement Interest-Only Mortgage?

A retirement interest-only mortgage (RIO) is a way for older homeowners to borrow in retirement. Much like with a standard interest-only loan, borrowers only need to repay the interest rather than the capital – which can be a lot more achievable for those on a pension income.  There’s usually no set repayment date; rather, when the borrower dies or goes into care, the house will be sold and the mortgage repaid, with any additional value in the house forming part of your estate.

What are the Benefits of an Interest-Only Mortgage?

  • Your monthly repayments are  more affordable   than  repayment mortgages 
  • You can unlock some of the equity in your home to pay off outstanding debt
  • No need to demonstrate a suitable plan for repaying the mortgage
  • You can stay in your home with the property being sold after you die or move into long-term care to repay the loan
  • Removes the worry of repaying the capital sum owed in retirement
  • More likely to have something to pass on as inheritance
  • Avoid having to downsize to a smaller property
  • The loan term is not fixed
  • Generally cheaper when compared to most Lifetime Mortgages

Equity Release with a Retirement Mortgage

A retirement mortgage is similar to types of equity release schemes like a lifetime mortgage, where you pay-off the original capital and possibly any interest when you die or move into long-term care. An Equity Release Mortgage will affect your inheritance and will beneficiaries, generally your immediate family and therefore requires specialist Equitry Release Mortgage advice, check that your advisor has the required Equity Release qualifications, and involve your family in the decision-making process. 

With a lifetime mortgage you will either:

  • Have a larger amount to repay at the end because there are no monthly repayments and the interest is rolled-up and added to the total loan value, or
  • Make monthly interest payments and ad-hoc capital repayments during the term of the mortgage. This reduces or stops the effect of interest roll-up, but involves higher monthly repayments.

But, with a retirement interest-only mortgage, you only pay off the interest each month, so your monthly repayments will be lower.

This means you should be more likely to have something to pass on as an inheritance, or pay for long-term care.

How Can Friends Capital Help?

Friends Capital have pre-existing relationships with lenders that welcome interest only mortgages. We can search the entire market and get access to the best and most exclusive deals available. Then we will choose the deal that are most appropriate to your personal circumstance. We can:

  • Find you a lender that offers Retirement Mortgages only mortgages
  • Find you a deal appropriate to your personal circumstance
  • Offer unbiased financial advice
  • Give advice on what mortgage lenders will require, including giving you advice on an exit strategy for the mortgage end
  • Give you a no obligation mortgage quote
  • Deal with all the paper work, liaise with the lenders and solicitors. We will also make sure the application goes through as quickly as possible

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Two Steps to Contacting Friends Capital 

Step 1 

Either call us, email us or request a call back using our call back submission form below. 

Step 2 

One of our friendly advisors will either call you back within 24 hours (usually the same working day), or will take details from you in order to best deal with your situation. 

When you speak with us, we will take a ‘fact find’. At this stage we take basic details about your situation. We will then search the whole of the market and find you the best deal available. 

If you are happy with the deal that we offer, we will then contact the lender for you and get you what is called a ‘decision in principal’. 

If you’re happy with the decision in principal then we will secure this deal for you and deal with the application for you on your behalf. 

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