Retirement Interest Only Mortgage

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Are You Considering Equity Release With a Retirement Interest-Only Mortgage?

Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui

Are You Considering a Retirement Interest-Only (RIO) Mortgage to Access Property Wealth? Discover What’s a RIO Mortgage & How the Repayments Work. Read This to Get the Answers You Need.

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You must be aware of a retirement interest-only mortgage; one of the newest later-life mortgage options available in 2022!

With more than 100 retirement interest-only products on the market, you’re spoilt for choice with even more fantastic retirement options.

Could a retirement interest-only mortgage be the key to your retirement financial freedom?

We’ll help you discover:

  • What’s a retirement interest-only mortgage (RIO) mortgage?
  • How does a retirement interest-only mortgage work?
  • How much can I borrow with a retirement interest-only mortgage?
  • What are the costs of a retirement interest-only mortgage?
  • How to use a retirement mortgage calculator
  • Who can get a retirement interest-only mortgage?
  • Who offers the best retirement interest-only mortgages?
  • Are retirement interest-only mortgages a good idea?
  • What are the advantages & disadvantages of an interest-only mortgage?
  • What are the retirement interest=only mortgage rates in 2022?
  • How do you pay off a RIO mortgage?
  • What’s the difference between a RIO mortgage & a lifetime mortgage?
  • Does Barclays offer retirement interest-only mortgages?
  • Does the post office offer retirement interest-only mortgages?

Our dedicated team is passionate about helping you achieve a dream retirement.

So it’s our goal to provide you with all the necessary information. We combed the market to find the latest RIO scoop.

Let’s find out now!

What's a Retirement Interest-Only (RIO) Mortgage?

What’s a Retirement Interest-Only Mortgage (RIO) Mortgage?


A retirement interest-only mortgage is the latest type of later-life mortgage in the UK.

It allows homeowners over the age of 55 to unlock tax-free cash from their home, with only the monthly interest being paid off in their lifetime.

Retirement mortgages with interest-only payments were established in 2018.

They’ve had a slow start, but are growing in popularity.

The features of an RIO include:

  • Minimum age – Available if you’re 55 or older.
  • Interest only repayments – The loan itself is repaid when you die or go to a care facility.
  • LTV  Between 50% and 65% of your property value.
  • Borrowing cap – Usually somewhere between £500,000 and £1,000,000.

RIOs are the 4th most popular loan catering to the over 55s.’

They’ve surged in popularity since the onset of the Covid-19 pandemic in 2020.

RIOs are not the only interest-only mortgage in retirement that you can choose from.

They are very similar to the interest-only lifetime mortgage, but there are some key differences.

How Does a Retirement Interest-Only Mortgage Work?

With interest-only lifetime mortgage repayments, you’ll pay the interest on a monthly basis,

And the actual loan is repaid at the end of the plan when you die or enter a facility for long-term care.

How Much Can I Borrow With a Retirement Interest-Only Mortgage?

The amount you can get from a retirement interest-only mortgage varies from lender to lender.

Your first step on your journey towards a retirement interest-only mortgage is to get an estimate of how much cash you could unlock from your home through one of these fantastic products.

How to Use a Retirement Mortgage Calculator

Try our free retirement interest-only mortgage calculator

However, to calculate the exact amount you can receive from the RIO, you should try our retirement interest-only mortgage calculator.

By doing so, you can input:

  • Your postcode
  • Your estate’s market value
  • The age of the youngest homeowner

What Are the Costs of a Retirement Interest-Only Mortgage?

The costs of a retirement interest-only mortgage will vary depending on which provider and product you choose.

However, you can budget to spend between £1,000 and £3,000.

Keep in mind that you may also have to pay an arrangement fee and valuation and completion fees.

You’ll also need to put a bit extra aside for your solicitor and an independent mortgage broker.

Who Can Get a Retirement Interest-Only Mortgage?

To qualify for this interest-only retirement mortgage, the youngest homeowner must be older than 55.

You’ll need to pass an affordability check, and the lender will need to ensure that your home’s value is worth the collateral.

If you’re planning to take one of these interest-only mortgages into retirement.

You must prove that you’ll always have a form of income available to cover the interest costs.

Who Offers the Best Retirement Interest-Only Mortgages?

Most retirement interest-only mortgage providers are mutual and challenger banks.

And, as this new product sees continued growth, more and more leading financial institutions are becoming RIO mortgage providers.

Here are some of the top retirement interest-only mortgages providers in the field:

Halifax Retirement Interest-Only Mortgage

When it comes to retirement interest-only mortgages, Halifax is one of the leading RIO mortgage lenders on the market.

You can unlock up to 65% of your property value with Halifax, you’ll get a free valuation, and there are no product or lender fees.

Lloyds Retirement Interest-Only Mortgages

Lloyds bank proudly offers competitive rates for their retirement interest-only mortgages, so you’ll only have to make very small payments each month.

Plus, Lloyd bank’s plans come with a free home valuation.

Leeds Building Society Retirement Interest-Only Mortgage Products

You can unlock up to 55% of your property value with a retirement interest-only mortgage from Leeds Building Society.

Leeds Building Society’s plans are available for people between 55 and 80, and no minimum equity is required.

Nationwide Retirement Interest-Only Mortgage

Nationwide RIO mortgage rates are very competitive, considering they’re likely the best RIO mortgage providers in the UK.

Furthermore, Nationwide’s RIO products are fee-free, allow you to pay back 10% of the equity annually, and you can release up to £500,000.

If you’re set on a Nationwide retirement interest-only mortgage and want to achieve the best nationwide RIO mortgage interest rate.

Contact them directly for in-house advice on the best RIO mortgages they offer.

Santander Retirement Interest-Only Mortgage

Unlock up to 65% of your property value with Santander’s retirement mortgages.

You get a free valuation and there are no product or lender fees. Plus, if you are an existing Santander customer, you could access fixed rates at a low 2.74%.

Are Retirement Interest-Only Mortgages a Good Idea?

Retirement interest-only mortgages are a good idea if you want to free up equity from your home or combine paying for your home with saving for retirement or care costs.

Accessing equity from your home can also be helpful if you’re trying to avoid tapping into your retirement fund or if you haven’t managed to put much money away for your pension.

However, it is still a form of debt, so you need to be sure you can make the repayments before making any decisions.

What Are the Advantages & Disadvantages of an Interest-Only Mortgage?

Pros of Retirement Interest-Only Mortgages

The biggest benefit of a retirement interest-only mortgage is that your family will be left with a larger inheritance,

Due to monthly interest repayments, in comparison to other retirement mortgage products like equity release.

Additional benefits in Jul 2022, include:

  • Lower interest rates – The retirement interest only mortgage rates1 can be lower than that of lifetime mortgage schemes.
  • Advice not compulsory – You don’t need financial advice, even though most financial experts recommend it.
  • More capital – You can borrow more capital with the RIO mortgages than you can with lifetime mortgage products.
  • Pay back any time – You can repay the mortgage plan early, although there might be associated early repayment charges.
  • Relocate – You have the right to move homes or downsize, as with a lifetime mortgage.

Cons of Retirement Interest-Only Mortgages

The biggest drawback of a retirement interest-only mortgage is the risk that your lender could seize your property if you can’t repay the monthly interest.

Other disadvantages include:

  • Affordability checks – You’ll have to successfully pass the mortgage provider’s income and affordability checks to prove you can cover the monthly interest payments.
  • Variable RIO mortgage rates – Your interest rate might be fixed for the short term and could go up or down in the future (depending on your plan provider).
  • Mortgage renewal – You have to renew the mortgage scheme at the end of the initial interest-rate period – potentially incurring new costs and charges associated with taking out a residential loan policy.
  • Less inheritance – As with lifetime mortgage schemes, your estate will ultimately be sold to repay the mortgage provider, affecting the amount of inheritance you’ll leave behind.

What Are the Retirement Interest Only Mortgage Rates in 2022?

Retirement interest-only mortgage rates are usually variable and capped interest rates.

Initial RIO mortgages interest rates can be as low as 2.39%, reaching a cap of 3.74% in 2 to 10 years.

With this example, the overall average rate would be an average of around 3.4%.

RIO mortgage interest rates are usually lower than lifetime mortgages and are quite competitive in adjacent to traditional mortgages.

The best RIO mortgage rates you can achieve will be determined mostly by your age and property value.

To get the best retirement interest-only mortgage rates, you may want to contact a whole market mortgage adviser.

Equity release, on the other hand, comes with fixed interest rates, so it’s essential to compare the difference between fixed vs variable interest rates.

How Do You Pay off a RIO Mortgage?

You pay off an RIO mortgage monthly.

Unlike regular mortgages, they do not have a fixed term.

The capital is either paid once the house is sold, you go into long-term care, or you die.

Some lenders allow regular capital payments, which is great if your financial situation changes and you need to reduce your interest payments.

What’s the Difference between a RIO Mortgage & a Lifetime Mortgage?

The difference between an RIO mortgage and a lifetime mortgage is that a lifetime mortgage usually has a larger amount to pay off in the end.

This is because you are not required to make monthly payments on a lifetime mortgage, unlike RIO mortgages, where you only need to pay the original loan capital at the end of your term.

Other key differences include:

  • RIO mortgages are available from a younger age (around 50).
  • You can only take out a lifetime mortgage if you own 100% of your home’s equity. An RIO mortgage can be used to pay off an existing mortgage.
  • With an RIO mortgage, you have to pay off the interest as you go. This option is also available with a lifetime mortgage but is not compulsory (in which case the interest compounds instead).
  • RIO mortgages are generally more available. Lifetime mortgages are only available through brokers with equity release qualifications.
  • The application process for a lifetime mortgage is more strict, as you need to prove you can afford the interest payments.

The Best Retirement Interest-Only Mortgages in Jul 2022

The way to find the best retirement interest-only mortgage to suit your needs is by talking to a mortgage broker,

Or financial adviser who specialises in retirement products.

While the best retirement interest-only mortgages will be determined by your individual needs,

Nationwide is likely the most ‘high street’ name operating in this sector.

Are Retirement Interest-Only Mortgages Regulated?

Yes, RIOs are regulated. With retirement interest-only mortgages, FCA2 (Financial Conduct Authorities) oversees the industry,

And legitimate lenders will appear on the Financial Conduct Register3.

Common Questions

What is a Retirement Interest-Only Mortgage?

Who Offers Retirement Interest-Only Mortgage Plans?

How Much Can You Borrow with A Retirement Interest-Only Mortgage?

How Does A Retirement Interest-Only Mortgage Work?

Can I Get a Natwest Retirement Interest Only Mortgage?

Do Barclays Retirement Interest Only Mortgages Exist?

Can I Get a Post Office Retirement Interest Only Mortgage?

In Conclusion

Interest-only retirement mortgages are a fantastic way to gain access to some of the money in your home, but still, leave an inheritance for your heirs.

If, of course, you can afford the monthly payments.

While seeking advice is not compulsory when opting for a retirement interest-only mortgage, it’s still worth consulting your financial adviser before making any final decisions.

Furthermore, you must ensure that you’re aware of all your options, such as a retirement interest-only mortgage, and speak to your closest family, who can support you through your retirement journey.

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Editorial Note: This content has been independently collected by the SovereignBoss team and is offered on a non-advised basis. SovereignBoss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

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