Retirement interest-only (RIO) mortgages can be an excellent alternative to equity release for homeovers over the age of 50.
In this guide, we look at the benefits of RIO mortgages, how to qualify for one, and why they could be the right option for your needs and circumstances.
What is a Retirement interest-only mortgage & how do they work?
A Retirement Interest-Only (RIO) mortgage is designed for older borrowers and shares some similarities with equity release products—namely, that the loan does not typically need to be repaid during the borrower’s lifetime. However, unlike equity release, you do pay the interest on the loan throughout the term.
This structure makes RIO mortgages particularly appealing for those who wish to preserve the value of their estate for inheritance purposes, as the original loan amount remains unchanged until the property is sold or the borrower passes away or moves into long-term care.
Eligibility criteria
While specific requirements can vary between lenders, most RIO mortgage providers apply the following core criteria:
Age Requirements:
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Typically, you must be over 50 or 55 to apply.
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For joint applications, some lenders require both applicants to meet the minimum age, though not all do.
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Despite the product name, you do not need to be retired—income from employment or other sources is acceptable.
Home Ownership:
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You must own your main residential property, either outright or with sufficient equity in it.
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The minimum equity required differs by lender, but you typically need to hold a significant stake.
Property Value and Type:
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Most lenders will only consider properties valued at £80,000 to £125,000 or more.
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Some providers may be cautious or restrictive when it comes to ex-local authority homes, flats, or non-standard construction properties.
Affordability Checks:
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You must show you can afford the monthly interest payments.
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Acceptable income sources include:
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Earnings from employment or self-employment
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Private and/or state pensions
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Other verified income, including income from investments or rental properties
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Maximum Loan-to-Value (LTV):
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Most RIO mortgages cap the borrowing at 50% to 55% LTV.
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Some lenders, especially those offering bespoke underwriting, may allow for greater flexibility depending on your full financial picture.
Given the variation in lender policies and the nuanced eligibility rules, working with a mortgage broker who understands the RIO market is invaluable. They can match you with the most suitable lenders and help you navigate affordability assessments and property criteria.
How to get a RIO mortgage
The most effective way to secure a competitive RIO mortgage is by speaking with a specialist mortgage broker, such as ourselves. RIO mortgages can vary considerably between lenders—not just in terms of interest rates, but also regarding eligibility criteria, maximum loan-to-value ratios, and acceptable property types.
How much can you borrow?
Usually your borrowing is based on a maximum LTV and that value of your home. This means that the lower your loan size compared to the value of your home, the easier it should be to qualify.
Those with lower LTV loans are also typically offered better retirement interest-only mortgage rates.
Depending on the value of your home and your personal circumstances, here’s how much you may be able to borrow at 50% LTV:
|
Property Value |
Loan size |
| £80,000 |
£40,000 |
| £125,000 |
£62,500 |
| £250,000 | £125,000 |
| £500,000 | £250,000 |
The table below shows the maximum you could potentially borrow at 60% LTV:
| Property Value | Loan size |
| £80,000 | £32,000 |
| £125,000 | £50,000 |
| £250,000 | £100,000 |
| £500,000 | £200,000 |
Pros and cons
The table below highlights the main advantages and disavantages of RIO mortgages to help you decide whether this is the right option for you:
| Advantages | Disadvantages |
|
No need for you to demonstrate a plan for repaying the capital part of the mortgage |
You will need to demonstrate that you can afford the interest-only monthly repayments |
| You are more likely to have something to pass on as an inheritance | Your home will be sold to repay the loan when you die or start long-term care |
| Generally more cost-effective than most lifetime mortgages | If you cannot keep up monthly repayments, your home is at risk of repossession |
| The interest is not rolled-up (compounded) like with equity release mortgages | The LTV and your retirement income will determine how much you can borrow |
Retirement interest-only mortgage providers
Retirement Interest-Only (RIO) mortgages are not typically available through high street banks. Instead, they are offered by building societies and specialist lenders that focus on later-life lending. These providers understand the unique needs of older borrowers and offer tailored solutions for accessing equity while maintaining manageable monthly payments.
Lenders who offer RIO mortgages include:
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Building societies like Skipton, Leeds, and Bath are known for their flexible criteria and experience with RIO products.
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Specialist lenders that deal exclusively in retirement lending and equity release often provide the most competitive and tailored options.
There is strong competition in this sector, which benefits you as a borrower—but it also means rates and criteria vary significantly, making it crucial to work with a broker.
RIO Mortgage Rates
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Rates on RIO mortgages are generally comparable to standard residential interest-only products but may sometimes be slightly higher.
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The rate you qualify for depends on several key factors:
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Equity level in your home
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Credit history
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Affordability based on pension or other income sources
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The type and value of your property
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Alternatives to consider
If you're considering a RIO mortgage but are curious about other options, there are a few widely used alternatives that may suit your needs depending on your age, income, and financial goals:
Lifetime Mortgages (Equity Release)
How it works:
A Lifetime Mortgage allows you to borrow against the value of your home without making any repayments during your lifetime—unless you choose to. Instead, the interest is typically rolled up and repaid, along with the original loan, from your estate when you pass away or enter long-term care.
Key points:
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Available to homeowners aged 55+
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No monthly payments required, although voluntary payments are possible
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You retain ownership of your home
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Interest is usually compounded, which can reduce the amount of inheritance left behind
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Regulated by the FCA and requires advice from a certified equity release specialist
Best suited for:
Those who want to release equity without immediate repayment obligations, and are less concerned about preserving the full value of their estate.
Standard Mortgages for Pensioners
How it works:
Some lenders offer standard interest-only or repayment mortgages to applicants in their later years—often with far more flexibility than expected. These are traditional mortgage products, just with adjusted eligibility criteria to account for retirement income.
Key points:
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A number of lenders are now willing to lend into retirement
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Some offer mortgages to borrowers up to age 80 or 90, or even with no fixed upper age limit
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The main condition is proof of affordability—typically through pensions, investments, or other income sources
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Available on both capital repayment and interest-only terms
Best suited for:
Pensioners with a reliable income stream who prefer a more conventional mortgage structure without the estate implications of equity release or RIO mortgages.
Choosing the Right Option
Your choice between these options will largely depend on:
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Your age and health
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Your income and financial commitments
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Whether you want to leave an inheritance
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Your comfort with interest repayments
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The level of equity in your home
Speaking with a qualified mortgage adviser or equity release specialist can help clarify which product aligns best with your long-term goals.
Frequently Asked Questions
There is no maximum age as the balance does not need to be repaid until you pass away. At this point the RIO mortgage provider will take the balance from the proceeds of the property sale.