Retirement Interest Only mortgages.
Retirement interest only
Later life borrowers may consider a Retirement Interest Only (RIO) mortgage.
Find out more
A beginner’s guide to RIO mortgages.
We know there’s lots to think about when it comes to finding a mortgage. We’ve put together some general information to help you learn more about Retirement Interest Only mortgages.
- Retirement Interest Only mortgages are for borrowers aged 55+ and can be used either to purchase a new property or remortgage an existing home.
- A RIO mortgage has no set end date, and continues until the death of the last-named borrower, or when they move into long-term care. At this point, the loan is repaid by way of the property being sold, so a separate repayment plan is not required.
- Monthly repayments must be made and are on an interest only basis. Because these regular repayments are made borrowers are not adding to the mortgage balance or attracting compound interest.
- As well as borrowing funds to continue an existing mortgage, a RIO mortgage could be used to free up cash in order to fund a significant lifestyle purchase, make home improvements or help a child or grandchild to buy a home.
When it comes to any financial decision you’ll need to carefully consider what option is right for you, depending on your individual circumstances. You may wish to consider seeking the help of an independent financial advisor.
Here to help
Find a Retirement Interest Only mortgage.
Frequently asked questions about Retirement Interest Only mortgages.
With a Retirement Interest Only (RIO) mortgage borrowers pay a monthly interest payment and there’s no set end date. The mortgage continues until the last-named borrower dies or moves into long-term care, at which point the property is sold to repay the loan. Because of the monthly interest payments there’s no compound interest added to the loan, so the mortgage balance at the start of the loan will be the same amount at the end (plus any added fees or additional interest, and as long as all monthly interest payments have been made in full and on time).
Applicants must be aged 55 and over and there’s no maximum age for a Retirement Interest Only mortgage.
There’s no end date and the mortgage continues until the death of the last-named borrower, or when they move into long term care. If you are looking for a mortgage over a set term you may wish to look at later life mortgages.
RIO mortgages could be used for quite simply continuing an existing mortgage or remortgaging in order to free up cash from your property. This could be used for a number of acceptable reasons, such as funding a big purchase like a static caravan or motorhome, making home improvements or adapting your home for retirement, or even to enable a child or grandchild to get onto the property ladder through a gifted deposit.
As with all financial decisions you’ll need to carefully consider what is right for you depending on your individual circumstances.
Using our mortgage finder you’ll be able to look at our currently available Retirement Interest Only mortgages to see if we have an option to meet your needs, which will include our maximum loan amounts.
During your mortgage application we will need to complete an affordability assessment to establish how much you will be able to borrow depending on your individual circumstances, taking into account details of your income, financial commitments and expenditure.
If you choose us for your RIO mortgage we will require applicants 75 or over at the time of application to seek independent legal advice, before the mortgage funds are released. We also recommend anyone whose mortgage continues beyond 75 to have registered a lasting power of attorney for property and financial affairs.
With a RIO mortgage you’ll need to make monthly interest payments, which means interest doesn’t compound or ‘roll up’. As long as the monthly interest payments are made in full and on time, the original mortgage balance will not increase (aside from any added fees or additional interest) and the value of your estate will not be affected.
Although they both last until the end of life, a RIO mortgage and equity release mortgage are very different. One of the main differences between an equity release lifetime mortgage and a Retirement Interest Only mortgage is the way interest is calculated and paid. With a RIO mortgage you pay a monthly interest payment, and the capital you borrowed does not increase (aside from any added fees or additional interest). With an equity release lifetime mortgage you may have the option to pay some, all or no monthly interest payments. With an interest roll-up mortgage the total amount you owe will increase with the addition of the monthly interest due to the outstanding balance and opting not to make full interest payments will affect the value of your estate once the debt has been repaid.
It’s important you carefully consider all of the available options in order to find one which is right for you, and you may wish to consider seeking the help of an independent financial advisor.
Ipswich Building Society explained the process very clearly at each stage. My mortgage consultant was extremely helpful and efficient, she responded to my questions and queries very promptly and in general the process went very smoothly.
It is very easy to contact Ipswich Building society and to speak to an advisor. I received good advice and I am very happy with my mortgage. Everything was set up with the minimum of fuss.
We have conversations, not algorithms.
Our decisions are made by experts, not computers. We need to calculate the financials, but we understand there’s more behind a mortgage than the numbers on a page. We can’t promise to lend to everyone and anyone, but we’ll consider most applications on an individual basis.
Ready to go? We’d love to hear from you. Get in touch with our friendly and knowledgeable team.
Prefer to talk?
Call 0330 123 0723
From Our Blog
We only went and won it!
What is the best insurance for holiday lets?
How to get a holiday let mortgage – tips from mortgage brokers
Holiday Letting Insider Secrets: Top Tips to Boost Your Bookings
Nearly 1 in 5 UK adults have considered buying a holiday let property
Homes for Ukraine: Information for mortgage borrowers.