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Retirement is a time that any hard working person looks forward to, more time for family, hobbies, the jobs we have been promising to do for years around the house, and generally a time to relax.

One huge factor in making sure that we can sit back and enjoy our retirement is being debt free, or as debt free as is humanly possible given our circumstances. A big start would be not to have a mortgage payment hanging over our heads, something we can all relate to, unfortunately, this often not the case for an ever-increasing number of UK citizens, which is a real worry.

With this in mind, the Financial Conduct Authority is contemplating bringing in mortgages lasting into retirement, on an interest only basis.

Financial Conduct Authority (FCA) believes this type of loan could be a cheaper for older home owners.

They are proposing to introduce the ‘retirement’ mortgage, due to an increase in borrowers selling their homes or looking at more expensive equity deals.

The ‘retirement’ mortgage loan would be repaid on death or a move to residential care.

‘Retirement interest only mortgages have significantly different risks compared to lifetime mortgages. In particular, they do not feature the roll up of interest, meaning that consumers are not at risk of rapid equity erosion and the subsequent reduction of funds available for a bequest,’ the FCA consultation paper says.

‘We do consider that there are some risks associated with lending with no fixed term and we are proposing to add a small number of additional requirements for the sale of these loans,’ the consultation paper adds.

‘It will widen the choice for consumers quite considerably because there are some lenders who would like to offer this product at the moment but don’t feel they can. Older borrowers are currently restricted to equity release or a small number of lenders who are unlikely to offer them the best rates,’ said Ray Boulger, a mortgage analyst at John Charcol.

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