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Retirement Interest Only (RIO) Mortgages

A Retirement Interest Only Mortgage (often referred to as a RIO Mortgage) is a tax-free loan secured against the value of your home.

With a RIO Mortgage, you are required to make regular monthly interest payments. This means that the overall amount you owe will not increase over time.
RIO Mortgages are designed for people over the age of 55. The loan could be used, for example, to make home improvements, plan for your later life, or even to pay off an existing mortgage.

Retirement Interest Only (RIO) Mortgages

A Retirement Interest Only Mortgage (often referred to as a RIO Mortgage) is a tax-free loan secured against the value of your home.
With a RIO Mortgage, you are required to make regular monthly interest payments. This means that the overall amount you owe will not increase over time.
RIO Mortgages are designed for people over the age of 55. The loan could be used, for example, to make home improvements, plan for your later life, or even to pay off an existing mortgage.

Book an initial,
no-obligation consultation

We operate to the highest standards and will always explore other financial options available first before proceeding with an equity release plan. We will only arrange a mortgage if we are completely happy that it meets your best interests. If it’s not suitable for you, we will say so.

How does a RIO Mortgage work?

RIO Mortgages enable you to borrow against the value of your property, whilst making interest-only payments.
The interest rate is fixed for agreed periods throughout the mortgage term, allowing you to plan for and manage your payments with greater certainty.
Unlike Lifetime Mortgages, which are based on age, RIO Mortgages are based on affordability into retirement. This is helpful for older borrowers who may struggle to get a standard residential mortgage.
If you have good retirement income, you may be able to borrow more with a RIO Mortgage than with a Lifetime Mortgage.
Most RIO Mortgages are portable, which means that you may be able to move home and transfer your RIO Mortgage to your new property, up to the outstanding loan value.
When is a RIO Mortgage repaid?
A RIO Mortgage has no set end date. The loan does not have to be repaid until you sell your home, pass away or move into long-term care.
Most lenders will allow you to make overpayments of up to 10% per year without penalty.
For mortgages approved by the Equity Release Council, you have protection under the ‘No Negative Equity Guarantee’. This means that your estate won’t have to repay more than what your home sells for, even if you owe more.

Is a RIO Mortgage right for you?

To be eligible for equity release through a RIO Mortgage:

You (and your partner, where relevant) must be aged 55 or over.

You must own (or be buying) your own home.

You must have provable income into retirement.

Lifetime Mortgage pros and cons

Pros
  • You can potentially borrow more than with a Lifetime Mortgage (depending on your income).
  • The mortgage can be repaid early (early repayment charges may apply depending on the terms of your agreement).
  • You still own your property, so will benefit from any increase in market value.
  • You can still move home if you wish, subject to the new property meeting the lender’s requirements.
  • As long as interest payments are made, your original debt will not increase.
  • The original loan is repaid from the sale of you home when the last remaining borrower dies or moves out into long term care.
Cons
  • If you have an existing mortgage, this must be repaid first (as with a Lifetime Mortgage).
  • It will reduce the value of your estate and therefore the amount left to your beneficiaries.
  • You will need to pass the mortgage lender’s income and affordability checks. This includes retirement income.
  • You will have to make fixed monthly interest repayments.
  • Your interest rate may be fixed for the short term and could go up (or down) in the future.
  • The mortgage will have to be renewed at the end of the initial interest-rate period – possibly incurring new fees and charges associated with taking out a residential mortgage.
  • As with a Lifetime Mortgage, your home will eventually be sold to repay the lender, impacting the amount of inheritance you leave behind.
  • There is no flexibility in repayments and there may be less chance of you releasing further funds at a later date.
  • As a last resort, your home may be repossessed if you do not keep up with payments.

What our clients say

“We wanted to release equity to subsidise my savings. I’m running on a state pension, and I have a small annuity from another pension, so we wanted the money to be put aside for future holidays and living well in my retirement.
55Plus explained everything in great detail, which was good because we’d never released equity before; our adviser didn’t hold anything back and explained it all really simply. They encouraged us to go through the process with our family members and we went through it with our sons so that they would understand what it meant for them. They were happy for us to do it because they wanted us to enjoy our retirement.
Our adviser was excellent, and I was really pleased with how it all went. I’d definitely recommend it to anyone else. 55Plus are great at putting information across to us, they weren’t pushy and explained everything in layman’s terms.
As we didn’t have a particular project to spend the money on, we were able to take out money in chunks instead of taking out a whole lump sum, which made the interest amounts more manageable. That was one the great things our adviser explained and has given us peace of mind for our finances.”

Don and Julia

Chatham, Medway, Kent

Your questions answered

A Retirement Interest Only Mortgage is a loan against the value of your home, which doesn’t have to be repaid until the last borrower dies or moves into long-term care.

With a RIO Mortgage the interest is paid monthly, so at the end of the term, the borrowed amount is repaid by the sale of your home. A RIO Mortgage enables you to release equity whilst remaining in your home.

With a Lifetime Mortgage, interest payments are not required, instead they are ‘rolled up’ and added to the borrowed sum.

With a RIO Mortgage, the interest isn’t rolled up, because you pay the interest monthly. This means when the mortgage term is at an end, due to the last borrower passing away or moving into long-term care, the loan balance will be the same as the original amount borrowed.

To apply for a RIO Mortgage, you must be over 55 and you will need to meet certain affordability checks based on your later-life income.

No, you don’t need to have retired, you just need to be 55 or older.

Yes. If you wish to move home during the mortgage term, you can transfer the mortgage to another property, which will need to meet the lender’s requirements

The lender will have specific conditions that you’ll need to meet.

Yes. The yearly percentage you can pay will vary by lender.

A RIO Mortgage will reduce the value of your estate and therefore the amount left to your beneficiaries.

RIO Mortgage lenders are regulated by the Financial Conduct Authority.

We endeavour to work with lenders who are approved by the Equity Release Council. Where this is not possible, we will advise you accordingly.

How much could you borrow?

Our property value guide will help you understand how much you may be able to borrow.
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