10 Sep 2020
Legal & General has today launched a Retirement Interest Only (RIO) mortgage providing even more options for those hoping to use their homes to make the most of their retirement.
Retirement has changed rapidly in recent years, with people living and working for much longer, and the coronavirus pandemic has forced many people to reassess their plans. Increasingly, people are requiring a range of diverse financial solutions to fund their needs over the course of their retirement.
For many older people, their home is their most valuable asset and our research shows that there is upward of £1 trillion worth of equity in the housing stock of older home owners.*
Legal & General’s RIO is an interest-only mortgage designed for those aged 55 and over with an interest rate which is fixed for the duration of the mortgage. It can be used to replace an existing interest-only mortgage, to remortgage your home or to purchase a new home. The RIO allows homeowners to borrow up to 60% of the value of their homes to help them achieve their ambitions, whether that’s to improve their home and garden, to support their children and grandchildren or to boost their retirement income.
The amount that can be borrowed will be based upon an affordability assessment, looking at a borrower’s household income and outgoings, to make sure they can keep up payments, both now and at the point they are no longer working, if they are not already retired. Every month borrowers will pay the interest due on the balance of their mortgage, helping long-term financial planning.
Claire Singleton, CEO of Legal & General Home Finance: "People’s needs in retirement are evolving and are more varied than ever. This has never been more true than now, as we find ourselves dealing with the reprecussions of lockdown and the coronavirus pandemic. It is therefore really important that we offer a range of later life lending options, which allow people to make the very best of their own retirement.
A Retirement Interest Only mortgage provides people with the opportunity to access funds from their home, while being reassured they can anticipate the long-term costs and impact on their income and assets. Combined with our range of lifetime mortgages, which includes options for people to pay monthly interest and to use their equity to pay an income, our Retirement Interest Only mortgage means we can offer customers the wide range of options they require."
A RIO only has to be repaid from the sale of the home when the borrower, or the remaining borrower (if the mortgage is in joint names), dies or moves out of the home into long term care. However, if borrowers decide to repay the mortgage they can do so at any time, but may need to pay an Early Repayment Charge.
The information contained in this press release is intended solely for journalists and should not be relied upon by private investors or any other persons to make financial decisions.
*Last Time Buyers Report
The Retirement Interest Only Mortgage is available to people over 55. It’s a loan secured against the value of their home. Interest is paid each month. The loan isn’t repaid until the last remaining borrower dies, or mores permanently out of the home and into long-term care.
As a last resort, the home may be repossessed if the borrower does not keep up with payments.
If you gift the money away, you may need to pay inheritance tax in the future.
Notes to editors
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.4 trillion in total assets under management* of which a third is international. We also provide powerful asset origination capabilities. Together, these underpin our leading retirement and protection solutions: we are a leading international player in pension risk transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Through inclusive capitalism, we aim to build a better society by investing in long-term assets that benefit everyone.
*at 31 Dec 2021
Legal & General Retail Retirement’s mission is to help its customers lead longer, healthier, happier lives. We believe everyone should be able to have a ‘more colourful retirement’. The Division comprises the Group’s retirement savings and income, later life lending and care solutions businesses. In 2020, LGRR wrote £910 million of annuity premiums and issued £791 million of lifetime and retirement interest only mortgages.
(As of June 2021)