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Retirement interest-only mortgages (RIOs)

Are you looking to free up some funds to make the most of your retirement? A retirement interest-only mortgage could give you the help you need.

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What is a retirement interest-only mortgage?

A retirement interest-only mortgage (RIO) is a mortgage that lets you pay the interest monthly, without reducing the original amount (capital) you have borrowed. A RIO is typically designed for people over the age of 50 and older borrowers who may struggle to get a standard residential mortgage.

With most RIO mortgages in the UK, you only repay the loan when you sell your property, move into full-time care or pass away.

Like with a standard mortgage, you’ll have to prove you can afford the monthly interest repayments. To take out a retirement interest-only mortgage, it’s worthwhile getting expert advice from a qualified mortgage adviser. 
 

Why choose a retirement interest-only mortgage?

You might be looking to take out a retirement interest-only mortgage because you want to:

  • Get a mortgage term extension but are unable to

  • Buy a retirement property that suits your needs better than your existing home

  • Release funds from your property to boost your retirement finances

  • Gift money to loved ones for a variety of reasons

Even if your bank or building society is unable to offer you a new mortgage, our specialist mortgage advisers can search the market to try and find the most suitable retirement interest-only mortgage for you.

What are the benefits and drawbacks of a retirement interest-only mortgage?

If you’re looking at your options and aren’t sure if a RIO mortgage is right for you, here are some of the key benefits and drawbacks for you to consider.

Benefits

  • You could release funds tied up in your home to pay off existing debt
  • You could pass on an early inheritance
  • You won’t have to downsize to a smaller property
  • Your mortgage can be repaid early (although there may be an early repayment charge)

Drawbacks

  • You’ll need to prove you can afford the interest repayments through affordability checks
  • Your home will usually be sold off to repay the loan when you enter long-term care or pass away
  • Your home is at risk if you don’t keep up with repayments

Independent, expert advice

Our dedicated team are here to help and give you the right advice. By speaking to one of our independent advisers, they can get to know you and find out what’s right for you. They’ll search the whole market and help with advice that’s right for your circumstances.

 

Things to consider

  • A mortgage is a loan secured against your home

  • Your home may be repossessed if you do not keep up repayments

  • You should always think carefully before securing a loan against your home

  • If we refer you to a mortgage specialist within Key Group, and you take out a plan, the advice fee will be £1,299

Other retirement mortgage options

See what other later life lending options you have

Retirement repayment mortgage

  • Higher age limit than most mortgages

  • Remortgage in retirement

  • Pay both interest and capital monthly

More on repayment mortgages

Lifetime mortgage

  • For homeowners 55+
  • Unlock funds from your home
  • Choose lump sum or drawdown
More on lifetime mortgages
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