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What is a retirement interest only mortgage?

“Another year older another year wiser”, or so the quote goes, but if you are finding your mortgage options in retirement are confusing, help is at hand. If you are an older borrower you may be struggling to secure a standard mortgage especially if you are approaching retirement or have already retired. Some standard mortgages have maximum age restrictions and lenders usually expect your mortgage to have ended before you retire. They may also have restrictions over which income they will accept and in some cases may apply lower income multiples. These restrictions can make it harder to secure the mortgage you need. 

Fortunately, there is an alternative option available known as a Retirement Interest Only Mortgage (RIO Mortgage). RIO mortgages are a type of specialist mortgage designed for older borrowers who might otherwise struggle to secure a mortgage. With a Retirement Interest Only mortgage, a borrower can release equity from their own homes to enjoy retirement, help family or make home improvements whilst staying in their own home. A borrower can also use a RIO mortgage to buy a new property which better suits their needs such as a bungalow or retirement flat. 

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How does a RIO mortgage work?

Retirement interest only mortgages are typically available to borrowers aged 55 or over. The property must be the client’s main residence and they’ll need to own some of the equity in the property. The prospective borrower(s) will need to undergo a full assessment by the lender who will check your income, the value of your property, how much equity you have and your credit history. These checks are to ensure that you can afford to make the interest only mortgage payments. 

Once approved for a mortgage, the solicitor receives your funds. You’ll then make payments each month to cover the interest that is accruing on the principal balance that you borrowed. Unlike an interest only mortgage where you borrow over a set term, a RIO mortgage may have no end date.  The mortgage is repaid when the borrowers leave the property. 

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How will I repay a retirement interest only mortgage?

When the borrower is ready to leave the property, the mortgage will need to be repaid. RIO mortgages are typically repaid when the borrower: 

  1. Has moved into a care home and needs to sell their home
  2. Decides to move to another home or has moved in with family
  3. Has died and the executors are selling the property 


After the sale of the property, the principal balance will need to be repaid. The borrower or the executors of their estate (if the borrower has died) will need to arrange this. 

Some RIO mortgages allow you to make capital repayments to reduce the outstanding balance. But there may be restrictions as to how much you can repay each year without incurring early repayment charges. 


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Benefits of a retirement interest only mortgage

RIO Mortgages offer several benefits to older borrowers:

  • You can stay in your own home
  • It may be possible to release equity to make your home more accessible or make your retirement more enjoyable
  • You can buy another home that is more suited to your needs e.g. a bungalow or flat.
  • No fixed loan term so you don’t have to worry about what happens at the end of the term
  • Affordable monthly payments (you just pay the monthly interest payments)
  • No need to save to repay the final balance – you repay the mortgage on the sale of the property
  • What you owe doesn’t usually increase so you only have to repay the original balance and nothing more when you leave the property


To find out whether a RIO mortgage is the right solution for your circumstances, speak to our mortgage team. 

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Who offers retirement interest only mortgages?

Retirement interest-only mortgages are widely available through both traditional high-street lenders and more specialist lifetime mortgage providers. Each lender has their own lending criteria which determines who they will lend to. Not all lenders will be the right fit for your circumstances which is why it’s worth speaking to our team. Our friendly mortgage advisors will assess your situation, offer advice and find the mortgage that’s right for you. 

Why choose Simple Fast Mortgage for expert advice on RIO mortgages?

If you are considering applying for a RIO mortgage, contact our experienced mortgage team for advice. We’ve worked with many older borrowers and have been able to secure them RIO mortgages on favourable mortgage terms. Our advisors have extensive knowledge and experience of the mortgage market so we know what deals are available. The team also have a thorough understanding of the criteria of the different lenders that offer these mortgages so know which will be the best fit for your circumstances. When you work with us, we’ll make the process as stress-free as possible by liaising with the lender and your solicitor on your behalf so you don’t have to. To start your application or to chat with our friendly team, please get in touch. 


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