3 min Read
02 May 2019

Written by Lauren

Nationwide first major lender to offer retirement interest-only mortgages

Nationwide amongst first to offer retirement interest only mortgages

Nationwide becomes one of the first major high street mortgage lenders to offer retirement interest-only mortgages. For now, the offer is limited to existing mortgage customers, allowing them to extend their existing interest-only mortgages into retirement.

A retirement interest-only mortgage is aimed at those who have reached pension age but have been unable to clear their debt. It allows those that are over 55 to re-mortgage to a new deal, meaning the interest continues to be paid off monthly, rather than accumulating and eating into the equity that the homeowner already holds. There are currently tens of thousands of pensioners that risk losing their homes as their interest-only mortgage nears maturity. Many don't have a repayment plan or sufficient savings in place, so risk being forced to sell their property to raise the funds to pay off the mortgage. A retirement interest-only mortgage could potentially help those that find themselves stuck.

What is a retirement interest-only mortgage?

A retirement interest-only mortgage has similarities to an interest-only mortgage but:

  • It is aimed at those over 55
  • During the term you only make interest payments on the loan and the capital is only paid when you die, sell the property or go into full-time care
  • You only need to prove you can afford the interest-only repayments

How do I get a Nationwide retirement interest-only (RIO) mortgage?

There's no fixed term for the retirement interest-only mortgage and most borrowers would opt to switch to it once their current interest-only mortgage matures. Anyone considering a Nationwide RIO mortgage should understand that a large proportion of the money upon sale of the property would be used to pay off the loan.

The criteria to qualify for a Nationwide retirement interest-only mortgage:

  • you must be over 55 and under 85 years old
  • have an existing Nationwide mortgage
  • be in receipt of a state, workplace or private pension
  • be living in the property

The maximum you can borrow on a Nationwide interest-only mortgage is £500,000 and you are restricted to borrowing a maximum of 50% of the property's value.

Retirement interest-only mortgage vs Lifetime mortgage vs Equity release

Anyone considering an interest-only retirement mortgage may also want to consider a lifetime mortgage or equity release. We cover this in our article how to release equity in your home - equity release mortgages explained.

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