Freephone 0800 802 1051
Freephone 0800 802 1051

Newbury Building Society RIO Mortgage Details & Rates

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RIO Mortgage

  • Type Discounted
  • Rate 3.45%
  • APR 4.40%
Incentives:
  • Free Valuation
  • Free Application
  • Legal Fees Contribution
Offers:
  • Discounted Interest Rate
  • Interest-Only Mortgage
  • 3-Yr Early Repayment Charges
  • 20% Overpayments Allowed
  • Maximum LTV - 50%

Background

The Newbury Building Society was established in 1856 under the name of The Newbury Permanent Benefit Building and Investment Society. It was set up to be an independent, mutual society which helped serve the community in providing mortgages and savings. Since 2017, the Society has now recorded assets of over £1 billion and being a mutual organisation is owned by its members in order to create long-term value.

Newbury offers a range of mortgage products to cater for a wide variety of customers and their individual needs. They provide residential mortgages to a range of applicant ages, but in particular to later life homeowner(s) who still have the capacity to repay a mortgage upto age 90. This rationale has led to Newbury launching their Retirement Interest Only Mortgage (RIO) on a lifetime mortgage basis.

RIO mortgages are interest only mortgages with no fixed end date. They are available to older consumers and designed so that homeowners can use the sale of their home to repay their mortgage balance, which will be either upon death, or the last surviving partner moving into care.

Unlike an equity release lifetime mortgage, interest roll-up is not permitted on the Newbury RIO mortgage and the homeowner will be required to make monthly mortgage payments for the life of the mortgage, which will consist only of interest on the amount borrowed.

Eligibility

Newbury Building Society’s RIO mortgage is available for borrowers aged over 60. Joint applications are acceptable, subject to both applicants meeting age and income criteria.

These mortgages are available for both purchase and remortgage of a borrower’s main residence. Capital raising for property and non-property related purposes is permitted.

Newbury's RIO mortgage is only available on an interest-only basis. The mortgage balance will normally be repaid through sale of the mortgaged property, either on death, or on the last surviving partner moving into care.

There is no minimum income requirement. The Society will undertake a full analysis of income and expenditure to determine lifetime affordability of the interest only payments.

The minimum property valuation is £125,000, with no minimum equity requirement. The property must be the homeowner's main residence and must be located within England and Wales.

Newbury Building Society can accept adverse credit such as arrears, defaults and CCJ’s, dependent upon the amount, longevity and level of credit registered. Please contact the Equity Release Supermarket team on Freephone - 0800 802 1051 to check for eligibility.

Features

These Newbury Retirement Interest Only mortgages provide an initial tax-free lump sum cash release for immediate use. You will be required to make monthly mortgage payments for the life of the mortgage which will consist only of interest on the amount borrowed.

The maximum loan-to-value (LTV) is 50% of the property valuation, with a minimum loan of 50,000 and the maximum loan size being £500,000.

Important to note, unlike an equity release lifetime mortgage, interest roll-up is not permitted. This also means that, unlike equity release lifetime mortgages, the Newbury RIO mortgage does not include the Equity Release Council standard of having a No Negative Equity Guarantee.

Ability to keep up to the monthly mortgage payments may be affected if income reduces, outgoings increase or interest rates rise. This means the homeowner could put their home at risk if they fail to keep up with payments.

There is no maximum term or age by which time the mortgage must be repaid. It will run for the duration of the last surviving homeowner and/or last homeowner residing in the property.

There is no need for any repayment strategy such as endowment, investment or repayment basis as the loan will be repaid from the proceeds of the sale of the property.

Tapered early repayment charges (ERCs) apply for just 3 years of the 5-year discounted product term. these are 3% in year 1, 2% in year 2 and 1% in year 3.

The homeowner must make all monthly interest payments as they fall due until the RIO mortgage finishes. Homeowners could put their home at risk if they do not keep up with their RIO payments.

If a single applicant passes away, the mortgage will still have to be repaid, usually by sale of the property. On joint applications, the mortgage will continue in the name of the survivor and payments must be continued to be maintained.

Options

In addition to the monthly interest only payment, the Newbury Building Society will permit an extra 20% capital repayment each year with no penalty.

The mortgage is portable and can be transferred to a new property, subject to acceptance criteria.

The Newbury usually has a choice of discounted and fixed rates within its product range. However they are subject to change, hence contact the Equity Release Supermarket team on Freephone 0800 802 1051 for all the latest interest rates on offer.

Once the discounted interest rate period ends the mortgage will revert to the Newbury’s standard variable rate (SVR), unless another product is selected before or at expiry.

Practicalities

This Newbury Retirement Interest Only Mortgage is ideal for the homeowner who wants to only make monthly interest payments over their lifetime and are able to demonstrate lifetime affordability of these payments. With this product, the homeowner is able to simply make interest-only payments over their lifetime.

Because homeowners are required to make the interest only payments, the balance will remain the same as it started, assuming payments are maintained. This is ideal for those looking to protect and maximise their remaining equity, to pass on to loved ones or to retain for use at a later date.

The Newbury RIO mortgage will always ensure the balance will remain the same as it started, assuming monthly interest payments are maintained. This strategy is ideal for those looking to protect their inheritance, or looking to retain as much capital as possible, or maybe considering taking equity release at a later date.

This product is ideally suited for those looking for an interest-only mortgage and have decided against downsizing and wish to remain in their home.

Alternatively, where homeowners can’t get a mainstream mortgage due to age, or even where an interest-only mortgage lender is demanding repayment, the Newbury RIO mortgage can provide an excellent remortgage solution.

Another concept for these RIO mortgages is they offer an interest-only bridge facility into retirement. Maybe this is to a certain point where a repayment vehicle becomes available, such as a tax-free lump sum from their pension, or drawdown by crystallization of pension funds.

*the rate quoted above offers a 1% reduction from the SVR over the 5-year initial term
**free valuation available on properties valued upto £1 million
***free application for existing borrower product transfers

To obtain further information or to request a quotation on the Newbury RIO Mortgage, please contact the Equity Release Supermarket team on Freephone 0800 802 1051.

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