What are retirement interest-only (RIO) mortgages and should I get one?

We look at who can get retirement interest-only mortgages, what you can use the cash for and weigh up the pros and cons.

Angela Kerr Director, Editor

KEY INFORMATION

Retirement interest-only mortgage summarised

Remortgaging as you get older can be more difficult, especially as you near retirement. This is where a retirement interest-only (RIO) mortgage can help:

• You’ll need to be over 50 to get a retirement interest-only mortgage
• Unlike with standard interest-only mortgages, you don’t pay off the capital until you die or go into long-term care.
• Retirement interest only mortgages can be a cheaper alternative to equity release
• RIO mortgages can be used for most purposes, including paying off an existing mortgage, home improvements, helping loved ones buy a house and estate planning.
• Retirement interest only mortgages are increasingly popular: The number of RIO mortgages sold in 2022 rose 23.4% to 3,158 , according to the FCA, up from 2,558 in 2021.

What is a retirement interest-only mortgage?

Retirement interest-only mortgages are aimed at older borrowers who struggle to get other types of mortgages due to their age. They can be used to let you take out a mortgage in later life or as an alternative to equity release.

RIO mortgages work in a similar way to standard interest-only mortgages because you’ll take out a loan against your property and make monthly payments to cover the interest.

But there are major differences: You don’t repay the capital until you die or go into long-term care – at this point your home will be sold. Also, it’s much easier to get a retirement interest-only mortgage because you’ll only need to prove you can afford the monthly payments, not the capital as well.

If you’re taking out a joint retirement interest-only mortgage, the property will only be sold when you both either die or move into long-term care.

Want to explore your retirement mortgage options? Get fee-free advice on retirement interest-only mortgages from award-winning mortgage brokers L&C

How do retirement interest-only mortgages work?

Here’s an example of how retirement interest-only mortgages work:

Sarah and Peter own a house worth £400,000 and borrow 25% (£100,000). They take out a retirement interest-only mortgage at 5% and make monthly interest repayments of £417.

If they go into long-term care in 10 years’, their house will be sold to repay the £100,000 debt.

Assuming Sarah and Peter’s property is now worth £450,000, £350,000 would be left after the sale of their home. And they would have paid £50,036 in monthly interest repayments over the 10 years.

What’s the difference between retirement interest-only mortgages and lifetime mortgages?

Both allow you to release equity from your home but there are key differences, including:

• With lifetime mortgages, which are a type of equity release, interest can be rolled up and repaid at the end of the loan, so there are no monthly payments. But this means the debt will grow.
• You may be able to borrow a larger amount with a RIO mortgage compared to a lifetime mortgage.
• You’ll need to prove you can afford the monthly interest payments in order to get a RIO mortgage.
• While to get a lifetime mortgage you must speak to a qualified equity release adviser.

Can I remortgage if I have a retirement interest-only mortgage?

Yes, it’s possible to remortgage if you have a retirement interest-only mortgage. However, you may need to do another affordability assessment if you’re switching lenders or want to increase the size of your mortgage. You should also check whether you need to pay any fees such as an early repayment charge if you remortgage.

How will I repay a retirement interest-only mortgage?

There are two elements to repaying a retirement interest-only mortgage: the interest and the capital.

• You repay the interest on the loan with your monthly mortgage payments.
• The capital is repaid as a result of your house being sold, either when you die or go into long-term care. However, some lenders let you make some capital payments during the term, although check any limits on this. While if you take out a retirement interest-only mortgage for a fixed term, you may wish to pay some or all of it off at the end of the term.

Who offers retirement interest-only mortgages?

RIO mortgage lenders include:

• Leeds Building Society
• Legal & General
• Hodge Bank
• The Family Building Society

However, you don’t need to do the legwork of finding retirement interest-only mortgage providers yourself. As a whole of market mortgage broker, our partners at L&C offer free mortgage advice to help you find the best deal to suit your circumstances. Let them compare the best retirement interest-only mortgages on your behalf and explain which deals you’re likely to be eligible for. Once they have found the right mortgage deal for you, they’ll guide you through the application process from start to finish. You can start a no-obligation search online now or call L&C on 0800 0732326.

What are the best retirement interest-only mortgage rates available?

Retirement interest-only mortgage rates vary by lender and other factors like your loan to value ratio. The easiest way to find out what the best retirement interest-only mortgage rates available are is to speak to a fee-free mortgage broker.

However, for an idea of what RIO mortgage rates are available in Winter 2025, The Family Building Society offers a 5 year fixed rate RIO mortgage at 5.54% (max LTV 50%, scheme fees £999 with £500 cashback for remortgages). And The Cambridge Building Society offers a Retirement Interest Only Variable rate for the whole of the mortgage term at 5.84%.

While Nationwide RIO mortgage rates are no longer available for new customers. But if you already have a RIO mortgage with Nationwide and want to switch deals or borrow more, the lender’s deals include a 10 year fixed deal at 4.94%.

Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.

What are the advantages of retirement interest-only mortgages?

• Eligibility: Unlike with a traditional repayment mortgage, with retirement interest-only mortgages you will only have to prove that you can repay the interest each month.
• Value: Retirement interest-only mortgages can be cheaper than lifetime mortgages.
• Flexibility: Some lenders let you take out retirement interest-only mortgages over a fixed period like 2, 5 or 10 years which means you can switch to a different deal afterwards.
• Stress-free: You don’t need to downsize to release money from your home.

Disadvantages of retirement interest-only mortgages?

• Affordability: You’ll need to pass affordability checks to prove you can meet the monthly interest repayments.
• Reduced inheritance: Your home will be sold to repay the mortgage when you die or enter long-term care. This will reduce the amount of money you can pass onto your loved ones.
• Repossession: If you don’t make your repayments, you may put your home at risk of repossession.

Who can get a retirement interest-only mortgage?

Banks and building societies will assess a number of factors before offering you a retirement interest-only mortgage, incuding:

1. Your age: You need to be at least 50 to apply for retirement interest-only mortgages although many lenders require you to be at least 55.
2. Income: You need to be able to prove you have a steady, reliable income that will more than cover the interest repayments on the mortgage both before and after retirement.
3. House value: Lenders will assess the value of your home and will only lend you a percentage of that amount. You’ll also have to have a minimum amount of equity in your home.

Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.

How much can you borrow with a RIO mortgage?

The amount you can borrow on retirement interest-only mortgages depends on a number of factors including your income and the value of your home. However, for illustrative purposes, Legal & General will lend up to a maximum of 60% of your property value.

How much are retirement interest-only mortgage fees?

Retirement interest-only mortgage fees vary but you should allow for £1,000 to £3,000. Fees you may need to pay include an arrangement fee, mortgage valuation fee, and a completion fee. Plus you’ll need a solicitor to act for you too.

So it’s important to make sure you get the best deal. By speaking to a mortgage broker, they’ll help you compare different deals including the fees charged so that you can make the best choice.

How do I apply for a retirement interest-only mortgage?

The easiest way to apply for a retirement interest-only mortgage is by speaking to a fee-free mortgage broker. They’ll go over some basic information including how much you would like to borrow and what for. They’ll go through your circumstances in detail and recommend a suitable product and help you with the application process and answer any questions you may have.

What can I use a RIO mortgage for?

There are lots of reasons why people take out later life mortgages. These include:

• Paying off an interest-only mortgage: One reason to get an retirement interest-only mortgage is to pay off an interest-only mortgage that has matured.
• Buying a property to let out: If you do this, ideally the rent on your Buy to Let property would cover the RIO mortgage repayments. But check the financial side carefully. A good place to start is our rent calculator which tells you how much you could rent out a property for based on your property type, location and local demand.
• Debt consolidation: If you have debts, you may consider taking out a retirement interest-only mortgage to release cash from your house to pay them off. Before doing this it’s advisable to get independent financial advice.
• Home improvements: You may want to get a retirement interest-only mortgage to fund improvements to your home if it means you can make changes to your property that mean you can live there for longer. For example, adding a downstairs bathroom or bedroom.
• Helping children or grandchildren onto the property ladder: With retirement interest-only mortgages, you could release some of the equity you’ve built up in your house to give to your children or grandchildren to help them get on the property ladder. Read more in our guide on The Bank of Mum and Dad – How to help your child buy a home.
• Estate planning: While if you have a large estate, you may consider taking out a RIO mortgage to pass on some early inheritance to family members. By reducing the size of your estate in advance means there may be a smaller inheritance tax bill when you die. However, before doing this, make sure you take independent financial advice to ensure you make the best decision for you. Find out more in our guide on How to avoid inheritance tax.

What types of retirement interest-only mortgages are there?

Just like when you take out a standard mortgage, with retirement interest-only mortgages, you can choose from fixed or variable rate deals.

Also, some lenders offer the same interest rate for the duration of your retirement interest-only mortgage. Whereas other lenders offer a fixed or variable rate deals for a set period. You’ll then roll onto its standard variable rate unless you remortgage onto a new retirement interest-only mortgage deal.

Want to explore your retirement mortgage options? Get fee-free advice on retirement mortgages from award-winning mortgage brokers L&C

Frequently Asked Questions