Nottingham Building Society reduces retirement mortgage rates
The Nottingham has announced rate cuts to its trio of retirement interest-only (RIO) products.
The new rates come alongside criteria changes from the lender, which has also increased its maximum loan-to-value for its RIO products to 50% from 40%.
Plus it has removed the mortgage fees (previously £995) from its three-year fixed offering.
The new products are:
- A fee-free two-year fixed rate at 2.75% up to 50% LTV (was 3.00%)
- A fee-free three-year fixed rate at 3% up to 50% LTV (from 3.20%)
- A five-year fixed rate at 3% up to 50% LTV with £995 fee (was 3.30%)
What is a RIO?
A retirement interest-only mortgage does what it says on the tin. The mortgage can be taken out close to or in retirement, so they are usually available to over 55s.
The borrower only pays the lender the interest on the loan and the mortgage has no set end date. The borrower (or their estate) doesn’t repay the RIO mortgage until they die, or move into long-term care.
RIOs are an alternative to lifetime mortgages – known as equity release mortgages – but they have key differences. The borrower needs to be able to show they can afford to pay the interest on the loan over the long term for example. The amount they borrow doesn’t increase because they are covering the interest payments each month.
The Nottingham’s national sales manager, Deborah Reeves, says: “Later life lending plays an important part in ensuring our lending options provide choice for people whatever their situation.
“So, having reduced rates on many of our residential mortgages and buy-to-let products in recent times it felt like the natural next step to reduce rates across our RIO range too.”
Earlier this week the building society also cut rates on its five-year fixed Limited Company buy-to-lets.