This Thursday, June 8th, marks the five-year anniversary since Hodge launched the UK’s first Retirement Interest Only (RIO) mortgage.
The RIO mortgage has seen numerous enhancements and expansions of its parameters over the past five years.
Originally, the maximum loan size offered was £500,000, but this has now soared to £1.5m. Additionally, the maximum loan-to-value ratio (LTV) increased from 60% to 75%, and the minimum age at application has been lowered from 55 to 50 years old.
Valuations, previously free up to £380,000, are now free up to £1m. Originally approved for a main residence, the RIO mortgage now also extends to a second home.
Hodge has reported an impressive 850% increase in RIO applications since 2018, highlighting the growing demand and acceptance of this product.
Emma Graham (pictured), business development director at Hodge, shared her thoughts on the anniversary. She admitted that RIO mortgages initially faced some skepticism and slow adoption as an alternative to equity release. However, Hodge remained confident in the product, seeing it as a viable stepping stone for customers who weren’t ready or comfortable with the equity release route.
Acknowledging the initial impact of limited knowledge and understanding of the product, Graham emphasised that Hodge has worked diligently to educate and support brokers on the alternative affordability-based financial solutions available for customers from age 50.
“Five years on, RIO is now a stable product in our mortgage portfolio. We are experts in the RIO field and have seen our applications steadily increase year on year,” said Graham.
She further added: “Our intermediary partners tell us it’s a great product to help their customers do all sorts of things.
“From debt consolidation to home improvements and gifting to family. But by far the most popular reasons for taking out a RIO mortgage, according to our data, is to purchase another property, or pay off any maturing interest only mortgages in later life.
“So, it’s great we offer a product that can help people at this time of need, allowing them to keep their home and make affordable interest only payments into retirement.”
