A Standard Security (Scotland) / First Legal Charge (England) will be taken over the property being purchased as security for the mortgage borrowing.
Early Repayment Charges
If overpayments of 10% or more of the loan amount are made in any 12 month rolling period during the initial period, and depending on which mortgage your customer has, the charges apply as follows:
- For our 2-year mortgage, the charge will be equivalent to 3% of the outstanding balance amount in year 1, and 2% in year 2
- For our 5-year mortgage, the charge will be:
o 5% of the outstanding balance in the 1st year
o 4% of the outstanding balance in the 2nd year
o 3% of the outstanding balance in years 3 & 4
o 2% of the outstanding balance in year 5
After the initial period, the Society will not make an early repayment charge if the mortgage is on Standard Variable Rate and is repaid. However, there will be certain redemption fees that will need to be paid (see our mortgage product rates leaflet for more information).
We’ll need evidence that buildings insurance for the property is in place before we can release funds.
Check our packaging requirements for full details of documents needed for mortgage applications.
Scottish Building Society require customers to receive Independent Legal Advice (ILA) in connection with RIO mortgages. Scottish Building Society do not cover the cost of ILA.
Legal advice associated with RIO mortgages may attract additional costs over and above solicitors standard charges.
How long does it take to arrange a Retirement Interest-Only Mortgage?
It usually takes about eight weeks for you to release funds from when we receive the application. If the mortgage is to provide a cash sum, this will be paid via the applicant’s legal adviser.
This mortgage can be moved to a new property if the application satisfies our normal lending criteria. If the new property is of a lower value, we may ask for part of the outstanding mortgage balance to be repaid.
Change of circumstances
If someone else moves into the mortgage property, for example a family member, the owner must obtain the permission of Scottish Building Society before they move in. Similarly, if ownership of the property changes from single to joint (for example, through marriage), the mortgage may become repayable. Scottish Building Society will assess each change of ownership individually.
Increased borrowing in the future
If income and/or the value of the mortgaged property goes up significantly, we’ll consider lending more in the future.
Tax and entitlement to benefits
A cash lump sum could affect tax liabilities so it’s a good idea to get more information and/or advice on tax issues before taking out a Retirement Interest-Only mortgage.
The law relating to taxation could change in the future and HM Revenue & Customs can give more details how the borrower’s tax position may be affected.
A cash lump sum could also affect entitlement to welfare benefits (such as pension credit and housing benefit) depending on financial circumstances.
Contact the Department for Work & Pensions or the Citizens Advice Bureau from more information on welfare benefits issues.