Some 16% of people take out a Retirement Interest-Only (RIO) mortgage to provide a family gift, Hodge has found.
The average RIO mortgage taken out in 2019 was £129,576, a figure which is close to the average mortgage debt of a first-time buyer.
Matt Burton, managing director of mortgages at Hodge, said: “This data is very revealing. We were surprised at the age of our RIO customers, when the Financial Conduct Authority reclassified these products, they saw a need for a mortgage that those approaching retirement could use to release equity in their homes that wasn’t a traditional equity release mortgage.
“Yet it seems that those in their 70 are seeing the advantage of a RIO mortgage, which allows them to enjoy the equity in their home and manage the interest payments.
“Despite figures saying that the uptake on RIO mortgages has been slow, we have been encouraged by the amount of people using the product to achieve their goals – which again made for interesting reading – with an amazing 16% of our customers using their payment to give a family member a gift.
“It seems the bank of the grandparents is well and truly open with our Hodge customers as they use their property’s equity to help out family.”
Over a fifth (22%) use a RIO to pay off an existing mortgage, 20% to buy another property, 18% for debt consolidation and 14% for home improvements.
Just over a fifth (21%) of Hodge’s RIO customers come from the South East of England, 19% are from the South West and 13% living in Scotland.