Criteria Hub to cover retirement interest-only mortgages
Criteria Hub have added retirement interest-only mortgages to its data bank.
Intermediaries will now be able to search a detailed set of criteria for this new sector of the mortgage market.
The FCA has recently relaxed its mortgage rules to enable more lenders to offer RIO deals to older borrowers. At present this remains a small segment of the mortgage market, but many expect significant growth over the next few years.
Unlike lifetime mortgages, RIOs are not classified as equity release mortgages so intermediaries do not need special permissions to recommend these products.
Criteria Hub director Jason Hegarty says: “We expect RIO mortgages to be a hugely popular option for older borrowers. It’s great to see a few lenders already moving into this space and we expect to see more follow throughout the rest of 2018 and beyond.”
The Criteria Hub database will show which lenders offer these mortgage products, and indicate key criteria such as maximum LTVs and affordability details for joint applicants.
The FCA’s defines a RIO mortgage as one where borrowers continue to pay the interest but there is no fixed end date for repaying the loan, unless the customer breaches certain contractual obligations. There is typically a minimum age requirement for these loans.
Currently it is mainly the building society sector that offers these RIO loans, with the Vernon, Penrith and Tipton building societies the most recent entrants to this market.
Hodge Lifetime’s national account manager James Young says: “Later life lending is growing significantly year-on-year as an aging UK demographic takes hold, coupled with the high proportion of UK property which is owned by this particular age group.”
It is also expected that these loans may appeal to some borrowers with interest-only mortgages, but with no means of repaying the capital.