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If you’re considering a Retirement Interest Only (RIO) mortgage, you may have some questions. Here are some of our most frequently asked questions.

If your question isn’t on our list, please call our New Business Team who will be happy to help.

What is a RIO?
RIO stands for ‘Retirement Interest Only’ mortgage. It is a mortgage where the amount we lend to you does not have to be repaid until a specified life event occurs. This could be if you go into long-term care or you (or for joint borrowers, the surviving borrower) pass away.

With a RIO mortgage you pay the interest monthly, so at the end of the term what you owe is what you’ve borrowed. Our RIO mortgage is suitable for you if you’re over 65 and would like to stay in your home and avoid downsizing. 

What is the difference between a lifetime mortgage and a RIO mortgage?
A lifetime mortgage does not usually require the interest to be paid off monthly instead, the interest is added onto the loan. With a RIO mortgage the interest doesn’t roll up (the interest isn’t added to the loan), because you pay the interest to us each month. This means when one of the specified life events triggers the repayment of the mortgage, it will always be the same amount that you borrowed originally.

When would I need to repay the mortgage if the RIO doesn’t have an end term?
Your monthly payments will pay off the interest owed on the amount you borrowed. You will need to repay the amount you originally borrowed when you, or each of you if you are joint borrowers:

  • Move out of the property to live somewhere else and it’s very unlikely you will move back. This might be the case if you go into long-term care

  • Purchase or move into a new property which will be your main residence, or you no longer use the property as your main residence

  • Sell the property

  • Pass away, or if you are a joint borrowers, the last occupying borrower passes away.

What criteria do I need to meet to be eligible for the RIO?
To apply for a RIO mortgage you must be over 65 and have at least 50% equity in your property. If you are applying for a RIO mortgage with someone else, you will need to prove that you can afford the mortgage on your own if the other borrower passed away. Other than that our RIO mortgages require the same criteria as our other mortgages. You can see our normal owner occupier lending criteria here.

Do I need to be retired to have a RIO mortgage?
No you don’t need to have retired to qualify for this mortgage. You just need to be 65 or older.

Can I repay the mortgage borrowed as well as the interest with a RIO mortgage?
No, a RIO mortgage is on an interest only basis only. This means your monthly payments will go towards paying off the interest charged and not the money which was originally borrowed.

What is a registered contact and why do I have to have one with a RIO mortgage?
A registered contact is someone that you have said you are happy for us to speak to if we can’t get hold of you to discuss your mortgage.

If we’re able to, we will let you know that if we don’t hear from you within a certain period, we will speak with your registered contact.

If you have a RIO mortgage with someone else, each of you must have a registered contact, and this is required for the life of the mortgage. Each of you can have the same person as their registered contact, but you can’t nominate each other for your registered contact. 

 The registered contact isn’t responsible for any obligations in respect of the mortgage. We will only give them information about your mortgage if we can’t contact you. They won’t be able to transact or make any changes to your mortgage.

We explain the registered contacts responsibilities in detail in our RIO registered contact declaration document which will be given to you by your mortgage advisor or intermediary.

Can I change my registered contact throughout the mortgage?
You can change the registered contact for your mortgage at any time. You can request to remove the current registered contact without their authority. A suitable replacement should be provided by you, and the previous registered contact will be advised that they are no longer associated to the mortgage.

To make the change we will need to know your new registered contact’s details at the same time we remove your previous registered contact. Your registered contact should be replaced with a new registered contact at the point of the removal. 

What if my registered person doesn’t want / can’t be the registered contact anymore?
Your registered contact may request to be removed and you will need to let us know who you would like as the replacement.

Please read our RIO registered contact declaration document for full details. This can be found in the pack provided to you by your mortgage adviser or intermediary.

What happens if I get into financial difficulty during the life of the RIO mortgage?
If, during the life of the mortgage you get into financial difficulty and are unable to afford your mortgage repayments, you should let us know as soon as possible so we can explore alternative options with you. These options will depend on what we have on offer at the time but may include equity release, Joint Mortgage Sole Owner arrangements or payment holidays.

If after exploring your options none  are suitable for your circumstances, you will need to sell your home and use the money from the sale of the house to repay the mortgage. If you are either unable or unwilling to sell your home we will be entitled to issue repossession proceedings.

What happens if my home is sold and the outstanding loan amount is higher than my property value?
If the mortgage amount you owe us is greater than what you sell your house for, you will still need to repay us the remaining loan. This may need to come from your savings, other assets or your estate.  

What happens if I want to move to a different property?
You can. If you wish to move house during the mortgage term you can transfer the mortgage to another property, as long as it meets our lending criteria. You do this by selling your existing property, repaying the existing RIO mortgage and taking out a new RIO mortgage on the same day you buy your new property.

The terms of the RIO are transferred as part of this. You would need to get advice before doing this, either from our in house advice team or an intermediary of your choice.

Will there be any fees?
Yes. These will be shown in the Illustration provided by your adviser. You can also find a list of all the fees that may apply during the mortgage on our website, familybuildingsociety.co.uk/fees.

What is the maximum amount I can borrow?
You can borrow up to 50% of the value of your property.

Can I pay off any of the capital during the mortgage?
Yes you can. The amount per year you can pay will depend on which RIO product you apply for. For details of the products available and how much you can overpay please refer to our RIO mortgage product summary documents.

 

THE MORTGAGE WILL BE SECURED ON YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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THE MORTGAGE WILL BE SECURED ON YOUR HOME

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOU MORTGAGE
                 

 

Family Building Society
Ebbisham House
30 Church Street
Epsom
Surrey KT17 4NL
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