Specialist mortgages you might not know about

Traditional mortgage products don’t always meet the needs of people with more complex or unconventional circumstances. This is why lenders have developed a broader range of specialised mortgage products to provide greater access to homeownership for a wider variety of people.

We’ve taken a closer look at some of the specialist mortgage options currently available in the UK.

Retirement interest-only (RIO) mortgages

Retirement interest-only (RIO) mortgages are for homeowners, typically aged over 50, who want to stay in their homes into later life while keeping their monthly repayments low.

RIOs only require borrowers to pay the interest on the loan each month, not the loan itself. The mortgage is usually repaid when the borrower passes away, sells the property, or moves into long-term care.

RIOs are more widely available now than they once were. Applicants still need a reliable income in retirement, like a pension, to meet the monthly interest payments.

Family assist mortgages

Family assist mortgages enable people with little or no deposit to buy a home by using a family member’s savings as security. Rather than gifting money outright, a relative deposits a set amount into a linked savings account which used as security.

The buyer still owns the property in full, and the family member’s savings are usually held for a fixed period which is typically between three and ten years. After the agreed time, it’s returned to the family member, provided the borrower has kept up with repayments.

If the borrower misses payments, the lender may keep the savings for longer, and in serious cases, some or all of the money could be kept. It’s important that everyone understands the risks before going ahead with this type of mortgage.

Self-build mortgages

Financing a self-build is very different from buying a pre-existing property. That’s where self-build mortgages come in.

Unlike standard mortgages, which release funds in a lump sum at the point of purchase, self-build mortgages are usually released in stages. These stages are aligned with key phases of the build, such as buying the land, laying the foundation, or completing the roof. Some lenders offer accelerated versions of these mortgages, providing funds at the beginning of each stage to help cover upfront costs such as labour and materials.

Self-build mortgages typically require detailed plans, costings, and planning permission before approval, and they may involve higher interest rates or stricter lending criteria.

Mortgages for short-term let properties

Not all standard mortgages allow short-term letting of a property, and without informing the lender, you could breach your mortgage agreement.

Some lenders have created mortgages specifically for short-term or holiday lettings. These mortgages allow for income from platforms like Airbnb and can consider this potential income as part of your affordability assessment.

These products often come with specific requirements, which can include maximum letting days per year or minimum income amounts.

Finding the right specialist mortgage

Specialist mortgages can be hard to find and it’s important to understand all the risks involved. This is where a whole-of-market mortgage broker can be really useful. A broker will assess your individual circumstances and help you find the best specialist lenders for your situation. If you do decide to work with a mortgage broker, don't forget to read Smart Money People customer reviews so you know who our community recommends and who to avoid.