The Retirement Interest Only Mortgage (sometimes called a 'RIO Mortgage') is available to people over 55. It's a loan secured against your home. You pay the interest each month, which means the amount you owe doesn't increase over time. You can use it for most purposes (including paying off an existing mortgage).
Retirement interest only mortgages are aimed at older borrowers, generally 55 and above. Because they are interest only, the low monthly repayments could suit you if you are retired but have a regular secure income.
It's possible to get an interest only mortgage with bad credit, but it's not easy in today's anti-risk lending environment. If you still have outstanding debt to pay off, this could make things even more complicated, as potential lenders will want to be sure that you can repay what you owe them.
In most cases, you qualify for an interest-only mortgage based on the projected monthly payment when your interest-only period ends. For example, if your interest rate is fixed for seven years with a 30 year loan term, you qualify based on the adjusted rate after seven years and one day.
Yes, it's possible to get a mortgage over 55. Although there isn't a maximum age limit to get a mortgage, most lenders do have restrictions in place. Some lenders have maximum age limits which can vary from 65 all the way up to 85.
The Retirement Interest Only Mortgage (sometimes called a 'RIO Mortgage') is available to people over 55. It's a loan secured against your home. You pay the interest each month, which means the amount you owe doesn't increase over time. You can use it for most purposes (including paying off an existing mortgage).
How Does an Over-55 Mortgage Work? This type of mortgage is basically a halfway-house between a standard mortgage or remortgage, and a lifetime mortgage equity release product. It is an interest-only mortgage where you pay the interest on the loan each month and retain ownership of your property.
Customers can still get the interest-only option if they have significant assets and show they can afford a bigger bill when the principal is due. Only a handful of private banks offer interest-only mortgages, and their requirements vary greatly, Koss says.
Most interest-only loans are structured as an adjustable-rate mortgage (ARM) and the ability to make interest-only payments can last up to 10 years. After this introductory period, you'll start to repay both principal and interest. This is repaid in either a lump sum or in subsequent payments.
Interest only in buy-to-let
Traditionally, banks treat buy-to-let mortgages as higher risk and, as such they are often more expensive. Usually, you'll need a higher deposit (at least 25% of the property's value, although some lenders will consider just 15%) and the overall fees tend to be higher.
Can I remortgage an interest-only mortgage? Yes, it's generally possible to remortgage onto either another interest-only mortgage, or a capital repayment basis if you prefer.
Is an interest-only mortgage best for buy-to-let? Most landlords prefer interest-only mortgages, as it keeps their overheads low. The loan can eventually be repaid by selling the property (hopefully at a profit) so provided you can afford the initial deposit, interest-only is often your best bet.
While there's no minimum age requirement, retirement interest-only mortgages are generally aimed at older borrowers, such as the over 55s, over 60s and pensioners who might find them easier to qualify for than a typical interest-only mortgage.
Interest only mortgage
It is entirely your responsibility to ensure that at the end of the term the remaining balance on your mortgage is repaid in full by your repayment strategy. The maximum term for interest only is 25 years.
Although some lenders set their own maximum age limits, there is no maximum age for applying for a mortgage – so yes, mortgages for pensioners do exist. The golden rule is simply the same as for any mortgage: you need to prove you can repay the loan, one way or another.
An interest-only mortgage is a loan with monthly payments only on the interest of the amount borrowed for an initial term at a fixed interest rate. The interest-only period typically lasts for 7 - 10 years and the total loan term is 30 years.
The 30 Year Fixed interest only loan is one of the loan programs that just emerged in the mortgage industry. This is an interest only fixed-rate mortgage that is amortized over 30 years and allows borrower to pay interest only for the initial interest-only period of 10 or 15 years.
For mortgages for over 50s, you will need to prove you have adequate income to cover the repayments post-retirement in the same way as you would if you were working full-time. You should expect to show your bank statements and a statement that confirms your pension payments or evidence that you are receiving a pension.
The majority of buy-to-let lenders have maximum borrower ages at the time of application between 75-80, although a handful of lenders might allow you to reach 85 depending on your circumstances and ability to meet their criteria. Therefore getting a 25-year buy-to-let mortgage may well be possible if you're 50.
Retirement Accounts: If you draw money from a 401(k), Roth IRA, traditional IRA or another retirement account, you can use this income to qualify for a loan. You must prove that your payments will continue for at least 3 years beyond the date of your mortgage.
The main reason people choose interest-only mortgages is to reduce the amount they have to pay out every month. If you can afford the monthly payments on a repayment mortgage, that is usually the better choice. Is interest-only best for buy-to-let? You will pay lower monthly repayments with an interest-only mortgage.
So what is an interest-only home loan? Simply put, borrowers only have to pay the interest for the period as well as any fees for a fixed period of time, usually five to 10 years.
Most investors and some homeowners have interest only loans. However, the option to repay interest only doesn't last forever. Most mortgages have a term of 30 years. Typically, the first 5 years is interest only.
Getting a mortgage when your only income is Social Security benefits is no different than applying for a home loan when you have a job. You'll need a down payment, proof of income, a qualifying debt-to-income ratio and a viable credit score.