Leeds Building Society has officially launched their suite of ten-year retirement interest-only (RIO) mortgages and made some criteria changes to provide greater flexibility to senior borrowers.
The new products include a free standard valuation and a £999 product fee. To meet the product criteria, customers will need to be aged between 55-80 when applying and the maximum loan is £1 million.
The ten-year fixed rate products details are:
- 3.99% ten-year Retirement Interest Only fixed rate up to 55% loan to value (LTV)
- 4.09% ten- year Retirement Interest Only fixed rate up to 55% LTV with a £500 cashback
Last year the Financial Conduct Authority’s (FCA) gave RIO loans the green light after they decided to reclassify the loans and treat them as a standard mortgage. The regulator felt RIO mortgages could help those who had maturing interest-only loans that had no repayment plan in place.
RIO mortgages allow customers to continue paying monthly interest payments until they pass away or move into residential care. The lender can recoup the rest of their loan back through selling their house.
Matt Bartle, Leeds Building Society’s director of products, said: “We drew on our experience within the interest-only market to become the first national high street lender to launch retirement interest-only products in July. Since then, we have further enhanced our expertise in this area and know from our own research and market trends that consumers are increasingly looking for longer-term products.
“As a result, we’ve introduced two new ten-year retirement interest-only mortgages, one with a cashback option, to ensure we continue to offer choice to consumers and help meet the needs of their own individual circumstances.”
Leeds Building Society is also introducing criteria changes to its Retirement Interest Only offering, enabling income drawdown plans and self-invested personal pensions (SIPPs) to be considered when assessing income for applications.
Bartle added: “We regularly keep our mortgage criteria under review to meet the needs of those often underserved by the market.
“The consideration of appropriate drawdown plans and SIPPs during the affordability assessment is another example of providing increased flexibility for those looking at Retirement Interest Only mortgages as an option.”
This new range of Retirement Interest-Only mortgages entering the market is set to become more and more popular as the FCA remove the barriers to selling them to consumers.
As a Conveyancer, how will this benefit the property sector, will it encourage older buyers to downsize or release equity?