It's becoming easier for homeowners to get a mortgage that runs into retirement. There are now 38 retirement interest-only mortgages (RIOs) on the market, up from only five available six months ago in July 2018, according to the latest Moneyfacts.co.uk research.
The Financial Conduct Authority (FCA) reclassified RIOs in March 2018 from being a form of
equity release to a standard mortgage, and despite a slow start, the mortgages have started to become more popular with providers, with 12 now offering these types of mortgages (up from two in July 2018).
RIOs allow those who haven't paid off their mortgage upon retirement to pay monthly interest on their mortgage until they die or go into long-term care, at which point, the mortgaged property is subsequently sold as a means to repay the loan.
The reclassification of RIO products from under the equity release umbrella in March 2018 could be good news for those borrowers who may have reached the end of their interest-only mortgage at an older age and would have had few options open to them.
Last month,
Moneyfacts reported that the number of mortgages permitted to end when borrowers are aged between 80 and 84-years-old has increased dramatically in recent years, rising from zero in 2014 to 1,078 products.
