Retirement interest only mortgage that is portable.

SilasMarner

Good evening,
I would appreciate comments on the following from people who know:- 
Both pensioners with appropriate income but limited savings. Need to move North to South and downsize. Even so, the cost is considerable in terms of fees and house prices for something we consider appropriate. Current house is approxiamtely 300k unencumbered. To cover fees and put some to the new house ( say +25K) we need around 50K. Would like to do a RIO on our current house and port it to any new house.  Understand the pitfalls of increasing interest rates. We should stress test O.K. on that. Any thoughts or direction please. Especially on the practicality of porting an equity release RIO. Thanks for your help.

[Deleted User]

Equity release or RIO?  You run the terms together but they are completely different products 

SilasMarner

Deleted_User said:

Equity release or RIO?  You run the terms together but they are completely different products 

Ah ! Well that's a start. Thanks.I thought one was just a derivation and offshoot of the other. It's RIO I mean. I have no wish for the debt to accumulate.

Linton

Looking at the Ts&Cs of my old RIO:  yes you can port the mortgage but:
1) You may have to pay off part of the mortgage if the new house is of lower value than the old
2) You must still be able to meet the affordability criteria

Of course your mortgage may be different.

On the risk of higher interest rates, you can get rates that are fixed for the duration of the mortgage.  This would seem to me a very sensible way to go in that interest rates are currently at a very low level historically and could easily double (or worse) at some point.  You dont want your RIO to become unafforadable. 

MWT

Just a thought, but it might be easier to plan to use a RIO for the purchase of the home you down-size to, and look elsewhere for a £25k unsecured loan, to cover your moving and purchase costs, which you could repay after you release funds from the sale of your current home.

If it impacts affordability for the RIO you could always look at making the loan repayment at closing a condition. (just check for any early repayment penalties).