Retirement interest-only (RIO) mortgage

A retirement interest-only mortgage - also called a 'RIO mortgage' - is a special type of home loan if you’re an older borrower (over 50) whose needs aren’t met by a standard mortgage.  

It can get harder to get a new mortgage as you get closer to retirement age, so a RIO mortgage can help by:

• letting you mortgage your home in later life, or

• providing an alternative to equity release.

It’s similar to a lifetime mortgage where the loan is usually only paid off when you sell the house, die or move into long-term care, but you don’t have the risk of compound interest.

Lenders set their own rules on who can apply for a retirement interest-only mortgage. 

You might need to:

• be a minimum age, typically over 50 or 55, but some lenders have no lower age requirement

• be mortgaging a property that is your main home

• have a minimum amount of equity in your home 

• prove you can afford the monthly interest repayments, now and after retirement. 

Explore all your options before applying and find an FCA-registered financial adviser who specialises in retirement planning.

Like a standard interest-only mortgage, a RIO mortgage has two parts: the interest and the capital (the loan amount).

Your monthly repayments cover the interest on the amount you borrowed, but the actual loan is usually only repaid when you sell your home.

Some RIO mortgages do state a set time to repay the money. If you’re still living in the home when you reach the end of the mortgage term, you will need to repay the loan at that point. 

Always check the details before agreeing to a RIO mortgage:  

• Most lenders don’t apply a time limit to repay your loan before you retire, but some will.

• Some lenders let you pay extra towards clearing the loan capital. This is optional but could mean you have less to repay after the property is sold.

Your home might be sold off to repay the loan. This might not be true for some, but as with any interest-only mortgage you need to have a plan in place for how you’ll repay the loan. 

Always get advice and discuss the pros and cons for your situation. Read our guide on Choosing a financial adviser. 

Both can release equity from your home, but there are differences between the two mortgages.

• RIOs may allow you to borrow a larger proportion of your home than a lifetime mortgage. This is because you make payments to maintain the balance, reducing the risk of negative equity. If you can afford to, a RIO may allow you to borrow up to 50-60% of the value of your home at age 50, while a lifetime mortgage will likely only offer you 10-20% at age 55.

• Applying for a RIO mortgage might be harder because you need to show you can afford the payments.

• With a RIO mortgage, you pay the interest each month. With a roll-up lifetime mortgage, you don't have to make monthly payments, so the interest can build up and increase what you owe. 

• The minimum age varies, but you usually can be younger to apply for a RIO mortgage.

• You must speak to a qualified equity release adviser to get a lifetime mortgage. 

Yes, it’s possible to remortgage with a retirement interest-only mortgage. 

You may have to do another affordability assessment if you switch lenders or want to increase the size of your mortgage, which could be difficult for some people. 

Find out more in our guide Remortgaging to get the best deal.

Retirement interest-only mortgages can be offered by traditional mortgage lenders, including high street banks and building societies.

If you’re coming towards the end of your current interest-only mortgage and want to stay in your home, talk to your lender to see if they’ll extend your mortgage term into retirement.

Talk to an independent mortgage broker or equity release adviser about your options. They don’t need to have an equity release qualification to help you find a retirement interest-only mortgage.

An independent adviser can see what mortgages are available and if they’re suitable for your situation. There’s usually a fee for their advice. 

You can find a regulated mortgage adviser on these websites:

• Personal Finance SocietyOpens in a new window

• UnbiasedOpens in a new window

It’s also a good idea to choose a firm that’s a member of the Association of Mortgage Intermediaries (AMI)Opens in a new window, the professional body for mortgage intermediary firms.

If you’re struggling to make your monthly repayments, talk to your mortgage lender about your options as soon as possible. 

You might be able to change to a lifetime mortgage where you can opt out of monthly repayments, but this will cost you more over time due to compound interest.

If you’re worried or have missed one or more mortgage payments, use our Debt advice locator tool  to find free and confidential debt advice online, over the phone or near to where you live.

There are other options available if you’re struggling to pay your mortgage – see our guide Help with mortgage payments.