A year ago, the Financial Conduct Authority approved the reintroduction of Retirement Interest-Only Mortgages ("RIOs") for those in later life. Today, the market is slowly starting to pick up pace, so what should you expect from a solicitor acting for your clients taking out one of these products?
The FCA have not imposed any additional requirements on solicitors for dealing with a RIO. The only requirements solicitors are to comply with are those set out in the UK Finance Mortgage Lenders' Handbook. These requirements are the same as for every other mortgage borrower. Is this sufficient? At Ashfords LLP, we think not.
In a standard Remortgage, there is no requirement for detailed advice to be given to the borrower, or for them to sign the mortgage deed in the presence of a solicitor. This means, the borrower could receive no more than a letter saying "here is the mortgage deed to sign". In standard Remortgage cases, this would probably not cause any real issues, but would it when dealing with the older, more vulnerable market?
We at Ashfords are experienced in dealing with those in later life and are alert to the substantial risks that could arise in the future. With this in mind, Ashfords LLP will always ensure a borrower taking out a RIO will receive detailed advice on the terms of the mortgage offer they are entering into. In addition, we will insist the borrower meets with a solicitor to sign the mortgage papers. This will ensure that the borrower is fully aware of what they are entering into and offer some protection to both Ashfords, and financial advisors in the future should a claim that the borrower was not aware of the nature of the transaction be raised by a family member.
Ashfords LLP can act in RIOs for a fee of £774 (including VAT) plus disbursements. We include the cost of meeting with a solicitor; either in one of our 6 offices, or one of our network of travelling solicitors at the borrower's home, within this fee.
The RIO team at Ashfords LLP is headed up by Kathy Cracknell, an Associate Solicitor. If you have any questions on how Ashfords LLP can assist you with clients entering into a RIO, please do not hesitate to contact Kathy on firstname.lastname@example.org.