The Nottingham Building Society has introduced three Retirement Interest-Only (RIO) mortgage products to support older borrowers.

There are seven-year fixed (3.85%), three-year fixed (3.34%) and two-year discount (2.99%) products available, all of which come with a £995 fee, a free valuation and 40% Loan To Value (LTV) limit.

What is a RIO?

RIO mortgages enable borrowers to release equity from their homes for a variety of reasons, from paying off an existing interest-only mortgage that has reached the end of term to funding retirement.

They are interest-only, without a term, and have a minimum application age of 55. They can offer an alternative to lifetime mortgages and other equity release products.

Redemption is at sale of the property following a life event such as the customer passing away, going into long-term care or selling the house. In the case of a joint mortgage, redemption will be when both applicants reach a life event.

Silver spenders

In a recent survey of retirees over 50, The Nottingham revealed 39% plan to spend their money whilst they are alive as opposed to leaving significant inheritance. 36% holiday three times a year and 39% class retirement as the best time of their lives.

Nikki Warren-Dean, head of intermediary sales for The Nottingham for Intermediaries, said: “The addition of RIO mortgages to our portfolio adds choice for people in, or heading towards, retirement.

“Our research shows many people want to use their money to enjoy their retirement rather than having large amounts of capital tied up in their property. RIO mortgages can help, so we wanted them to be available to customers.

“As with all The Nottingham for Intermediaries products, RIO mortgages are provided exclusively via our broker network so we have every confidence they will be supplied with expert advice and support to ensure it’s the right fit for the customer.”

Danny Belton, head of lender relationships at Legal & General Mortgage Club, added: “The building society sector is playing a major role in helping both the first time buyer and the older borrower.

“It’s great to see The Nottingham recognise the need for improved criteria and innovation for older borrowers with their new RIO mortgage range. As their research suggests, many customers will look to raise funds to help them enjoy their retirement.”