Back to December 2019

Leeds first to launch fee-free Retirement Interest Only mortgage with cashback

Leeds Building Society is continuing with its innovation in the later life lending market by offering the first Retirement Interest Only (RIO) mortgages with cashback and no product fee.

The Society was the first national high street lender to enter the RIO market and since then has worked closely with its broker partners and borrowers to understand this new and developing sector.

This helped it to be first to market with five, 10 and 15 year fixed rate RIOs, as well as cashback deals and improved criteria such as allowing the use of income drawdown pensions and SIPPs when assessing affordability.

The new RIO mortgages with £500 cashback and no product fee are:

  • 3.94% two year fixed rate, with a discounted rate for the following three years
  • 3.99% five year fixed rate
  • 4.24% 10 year fixed rate

Each is available up to 55% LTV (loan to value) and comes with a free standard valuation.

“Retirement Interest Only is still new and very much a developing market since coming into existence last year,” said Matt Bartle, Director of Products at Leeds Building Society.

“For that reason we continue to refine and build on our proposition as we learn more about the needs of this group of borrowers.

“We did a lot of research before we began this type of later life lending but the market was totally untested so remaining responsive to feedback is really important to us in shaping our range as demand continues to grow.

“Cashback is favoured by borrowers with smaller home loans so we’re now launching fee-free options to give borrowers even more choice.”

Leeds Building Society accepts RIO applications from borrowers aged between 55 and 80 and its range includes fixed rate deals for two, five, 10 and 15 years, with a choice of fee and incentive combinations, including cashback.

Ends

Notes to Editors

Key Features

3.94% two year fixed rate Retirement Interest Only mortgage up to 55% LTV with £500 cashback and no product fee                                                                

  • 3.94% fixed rate until 28 February 2022 then 0.70% discount on SVR for the subsequent three years
  • Available up to 55% LTV
  • £500 cashback upon completion
  • Free standard valuation up to £999
  • No product fee                                                                
  • 10% capital free over-repayments permitted each year
  • Available for customers aged 55 to 80 at application
  • Repayment method is sale of the property
  • Available for purchase or remortgage applications

 

3.99% five year fixed rate Retirement Interest Only mortgage up to 55% LTV with £500 cashback and no product fee                                                                

  • 3.99% fixed rate until 28 February 2025
  • Available up to 55% LTV
  • £500 cashback upon completion
  • Free standard valuation up to £999
  • No product fee                                                                
  • 10% capital free over-repayments permitted each year
  • Tapered early repayment charges – 5/5/4/3/2% until 28 February 2025
  • Available for customers aged 55 to 80 at application
  • Repayment method is sale of the property
  • Available for purchase or remortgage applications

 

4.24% 10 year fixed rate Retirement Interest Only mortgage up to 55% LTV with £500 cashback and no product fee                                                                

  • 4.24% fixed rate until 28 February 2030
  • Available up to 55% LTV
  • £500 cashback upon completion
  • Free standard valuation up to £999
  • No product fee                                                                
  • 10% capital free over-repayments permitted each year
  • Tapered early repayment charges – 6/6/6/5/5/5/5/5/4/4/4/3/3/2/2% until 28 February 2030
  • Available for customers aged 55 to 80 at application
  • Repayment method is sale of the property
  • Available for purchase or remortgage applications

Retirement Interest Only mortgages

The Financial Conduct Authority (FCA) introduced the first definition of what constitutes a Retirement Interest Only mortgage in 2018 and introduced specific regulations for this market.

A Retirement Interest Only mortgage will be repaid on a specified life event, which can include the sale of the property, moving into residential care, or the death of the borrower.

The regulations clarify the difference between Retirement Interest Only and lifetime mortgages – unlike a lifetime mortgage, the interest on a Retirement Interest Only mortgage cannot be rolled up so the borrower will have to demonstrate interest only repayments are affordable throughout the length of the loan.

For more details of Retirement Interest Only mortgages and how they compare to other later life lending, visit: http://www.leedsbuildingsociety.co.uk/mortgages/retirement-mortgages/

 

To discuss a new case with one of our mortgage development team, mortgage introducers should go to www.leedsintroducer.co.uk to find details of their nearest Business Developer contact.

Leeds Building Society won the title of Best Shared Ownership Mortgage Lender in the 2019 What Mortgage Awards, its fourth consecutive year of success in this category. It also was named Best Lender for Later Life Lending in the Legal & General Mortgage Club Awards 2019.

The Society operates throughout the UK and had assets of £20.7bn at 30 June 2019 (£19.4bn at 30 June 2018). The UK’s fifth-largest mutual is a Best Companies 2* employer and its head office is in the centre of Leeds, where it has been based since 1886.