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What is a retirement interest-only mortgage?
A retirement interest-only (RIO) mortgage is a loan secured against your home designed for homeowners aged 55 and over.
It requires you to make monthly interest payments while the original loan amount (capital) remains unchanged. The loan is repaid when the property is sold. Typically, after the last remaining borrower passes away or moves into long-term care.
You can use the funds in a variety of ways, such as:
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Boosting your retirement income
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Funding home renovations
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Gifting family members
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Repaying existing debts
ⓘ Be financially aware: You should always think carefully before securing a loan against your home to repay existing debt.
How do retirement interest-only mortgages work?
A RIO mortgage works by allowing you to unlock some of the equity in your home. During the mortgage term, you will only have to repay the interest owed on the mortgage. This will be done via monthly instalments.
The original loan amount is typically repaid when the property is sold, usually when the last remaining applicant moves into long-term care or passes away. Any remaining funds from the sale are passed to your estate. This allows you to maintain ownership of your home and help manage your finances while accessing some of its value.
To be eligible for a RIO mortgage, you must:
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Typically be aged 55 or older.
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Demonstrate you can afford the monthly interest payments.
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Meet the minimum property value criteria
Speaking to a qualified mortgage adviser ensures you fully understand the features, benefits and drawbacks and all of your other later life finance options, helping you make an informed decision.
Benefits and drawbacks of retirement interest-only mortgages
If you're considering a RIO mortgage, it's important to weigh up the benefits and drawbacks to see if it could be right for you.
How much can I borrow with a retirement interest-only mortgage?
Borrowing limits vary by lender and are assessed by several factors, including:
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Property value
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Income
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Loan size
The amount you could borrow will also be based on what you can afford. Lenders will look at your income and outgoings.
ⓘ Try our mortgage finder
Use our free mortgage finder to see how much you may be able to borrow.
Retirement interest-only mortgages FAQs
The cost of a retirement interest-only mortgage varies based on several factors, including:
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The amount you wish to borrow
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Interest rates available to you
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Additional fees, such as solicitor’s and surveyor’s fees
Our advice fee is £1,299, typically payable upon mortgage completion. Each case is unique, so it’s important to discuss the specifics of your situation to understand the total cost.
Our advisers will review all of your later life lending options to find the most suitable option for you. If they don't think a RIO mortgage is the right option for you, they'll tell you. If it is a suitable option, they'll search the whole market to find the most suitable RIO mortgage provider.
Yes, subject to criteria, taking out a RIO mortgage does not mean you have to stay at that property.
If you decide to move home and want to transfer the mortgage to a new property, you may be able to do so if the new property meets the lender's criteria at the time. Alternatively, you may be able to repay your RIO mortgage from the sale of your old property and take out a new mortgage for your new property. Early repayment charges may apply.
Yes, it may be possible to remortgage.
However, it's important to bear in mind that you may have to go through further affordability checks if you would like to change lenders or increase the amount you are borrowing. Early repayment charges may also apply.
Yes, you will continue to own your home as long as you keep up with the monthly interest payments.
Failing to make these payments could result in your property being repossessed, as the mortgage is secured against your home.
Taking out a RIO mortgage could affect your financial situation and potentially your eligibility for means-tested benefits.
Our expert advisers can help determine if any benefits you receive may be impacted and provide tailored guidance.
Why choose Key as your later life mortgage adviser?
Key is a specialist, award-winning later life provider for the over 55s. We help turn your property wealth into a way to fund your retirement. We research all later life mortgage options and provide trusted, expert advice that's personal to you.
Next steps to release equity from your home
We're here to help
Our friendly team is available: Mon-Thurs 9am-8pm, Fri 9am-5pm, Sat 9am-1pm, Sun closed.
Call free on 0808 252 9087 or book a call and we'll get in touch with you.
Page last updated: Tuesday 17 December 2024