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Retirement Interest Only (RIO) mortgages

Are you looking to help your loved ones financially, or do you want more money to further enjoy your retirement?

If you’re looking to make more of your free retirement time and need more money, or if your loved ones are struggling to get onto the property ladder, need help towards paying off their university fees or arranging a wedding, then a Retirement Interest Only mortgage (RIO) might be an option for you.

House prices have increased substantially over the last decade, which means if you own your home, you may have equity tied up which can be released without selling your home.

Retirement Interest Only mortgages - the alternative to traditional mortgages

Getting a mortgage in later life has traditionally been difficult, but the Retirement Interest Only (RIO) mortgage helps older borrowers with an alternative way of raising funds without selling your home or having to make large monthly capital repayments. 

What are the benefits?

  • It allows you to choose the lifestyle you want in retirement
  • It gives you the option to release funds to make improvements to your home
  • It’s a way of helping family members out with money to buy their first home, pay for their dream wedding or pay university fees or loans
  • It can plug the gap left by a standard Interest Only mortgage
  • With the RIO mortgage, when the property is eventually sold the loan is repaid and the remaining equity stays within the family.

Who is RIO for? 

RIO mortgages are available to those over the age of 55 and who have a reliable income that will allow them to make payments now and in the future. You will be able to borrow up to 40% of the value of your home as a cash lump sum and will be charged interest only on the loan.

Unlike standard interest-only mortgages there is no set end date for settlement of the loan, borrowers pay monthly mortgage interest until they sell their house, go into long-term care, or pass away. At this point the loan is repaid by selling the house.

Is RIO right for you – talk to the experts

If you’re interested in finding out more about a RIO mortgage let our mortgage experts advise you on what to do. Submit your details through the form and one of our mortgage advisers will get in touch or if you’ve already spoken to an adviser you can find their contact details here.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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What is a retirement interest only mortgage?

A Retirement Interest Only mortgage, sometimes called a RIO mortgage can help people who have previously considered downsizing their property in order to pay off their mortgage debts. With RIO you could remortgage and stay in your home for longer as you would only be paying the interest payments on your mortgage, not the capital repayments

If you remortgage onto a retirement interest only mortgage you could also raise funds to travel, carry out home improvements or fund grandchildren’s university fees, weddings or first house deposits.

How do retirement interest only mortgage work?

Retirement interest only mortgages work in a way where you will be able to borrow a percentage of the value of your home as a lump sum and will only pay the interest of the loan. You have to prove that you can afford the monthly interest repayments and go through the usual affordability checks with mortgages. There is no set end date for the settlement of the loan, it is repaid by eventually selling the property.

What is the difference between a lifetime mortgage and a retirement interest only mortgage?

The difference between a lifetime mortgage and a retirement interest only (RIO) mortgage is the fact that you still pay your capital repayments with a lifetime mortgage and you only pay the interest repayments with RIO. 

A lifetime mortgage is a way to boost your income later in life by allowing you to release some of the equity held in your property. This is a type of equity release where a loan is secured against your home and you repay it when you die or go into long term care. The interest that is due each month is rolled up and added to the mortgage loan, which means the outstanding balance increases over the time the mortgage is in place.

With a RIO mortgage as we have detailed above, the interest that is due each month, and the balance on the mortgage remains the same. Again, you will pay the balance off when you sell the property.

What criteria do I need to meet to be eligible for the retirement interest only mortgage?

The criteria for a retirement interest only mortgage is currently being over the age of 55 with a reliable and regular income that will allow you to make repayments now and in the future. 

What happens at end of a retirement interest only mortgage?

At the end of a retirement interest only mortgage, the loan is repaid by selling the house.

What our customers had to say “

“I found looking online for a remortgage very frustrating and time consuming so it was a no-brainer for us to go and seek mortgage advice in person. Nottingham Mortgage Services were brilliant in explaining everything to us and answering our questions.” January 2020.

Natalie - Derbyshire

“We would definitely recommend starting your mortgage search with Nottingham Mortgage Services because they are friendly, knowledgeable and patient which is just what you need, as being a first-time buyer can be stressful and overwhelming.” June 2019.

Anna and Dan - Matlock

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Mortgage advisers at Nottingham Mortgage Services will search thousands of mortgages from over 60 lenders for you. Send us an enquiry or if you’ve already spoken to an adviser, you can find their contact details here.

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Essential guides

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