Are you aiming to unlock equity from your home without making capital repayments or selling? A retirement interest‑only mortgage (RIO) could be an ideal solution for retirees. With a RIO mortgage you only pay interest each month, preserving more estate value while providing financial flexibility during retirement.

The average UK pension pot is substantially lower than many expect: a 2025 survey showed that individuals aged 50–59 hold a median of about £300,000, and those aged 60–66 hold around £310,000⁴.

Yet many retirees need an additional income of approximately £19,300 per year for a basic standard of living⁵. This growing gap is leading more homeowners aged 55+ to consider RIO products.

RIO mortgages are classified as standard interest-only mortgages, not traditional equity release products, since interest is paid monthly and the capital is repaid only when the property is eventually sold.

Ready to explore how RIOs might offer the financial freedom you need? Keep reading to learn more...

What Is a Retirement Interest-Only Mortgage?

A Retirement Interest‑Only (RIO) mortgage is a home loan designed for older homeowners (typically aged 50 or 55 and above) that allows borrowers to pay only the interest each month.

The capital is not repaid until a later life event, such as the borrower’s death or entry into permanent long-term care, when the property is sold and proceeds are used to pay off the loan.

This structure avoids the compounding interest characteristic of many lifetime mortgages or equity release products.

Most RIO mortgages do not have a fixed term. Some providers may impose a maximum age or term length, so applicants should confirm lender-specific requirements.

Lenders assess affordability based on the borrower’s retirement income (such as state pension, defined benefit or annuity income) and proof of ability to cover interest payments now and in the future.

The amount that can be borrowed is typically capped at 50 to 60 percent of the property’s value, depending on lender policy and individual circumstances.

Because RIO mortgages are secured against the property, failure to pay the monthly interest may result in repossession proceedings, similar to other forms of mortgage lending

RIO vs Traditional & Equity Release Mortgages

Retirement Interest-Only (RIO) mortgages differ significantly from both standard repayment mortgages and lifetime mortgages in how they handle repayments, affordability, and long-term financial impact.

Understanding these differences will help you determine which option best suits your financial goals in retirement.

RIO vs Standard Mortgages

A traditional residential mortgage requires monthly payments covering both the interest and the loan capital.

Over time, your loan balance decreases, and you build equity in your property.

In comparison, RIO mortgages only require monthly interest payments, with the loan repaid in full when the property is eventually sold.

Key differences:

• RIOs have no fixed term; traditional mortgages do.
• RIO borrowers only pay interest monthly, whereas traditional mortgage holders repay capital and interest.
• Standard mortgages usually offer lower interest rates but come with higher monthly payments.
• RIOs assess affordability based on retirement income such as pensions or annuities, while standard mortgages require employment income.
• Traditional mortgages allow for earlier repayment of the loan, whereas RIOs are repaid when the borrower dies or enters long-term care.

RIO vs Lifetime Mortgages

Lifetime mortgages are a common form of equity release but differ significantly in structure from RIOs.

The main distinction is in how interest is handled.

Feature	RIO Mortgage	Lifetime Mortgage
Interest payments	Paid monthly	Usually rolled up (compounded)
Capital repayment	On death or care home entry	On death or care home entry
Monthly affordability checks	Required	Often not required
Inheritance protection	More likely	Less likely due to compound interest
Interest rates	Typically lower	Typically higher
FCA classification	Standard mortgage	Equity release product

Key points:

• RIO mortgages prevent interest from compounding, helping preserve your estate's value.
• Lifetime mortgages do not require regular payments, which may suit those with no surplus income.
• RIOs involve more stringent affordability checks but typically offer lower interest rates.
• Lifetime mortgages offer more flexibility but reduce home equity over time due to compounded interest.

Who Qualifies for a RIO Mortgage?

Retirement Interest-Only (RIO) mortgages are designed for older homeowners who can demonstrate they have a reliable income to cover monthly interest payments.

Eligibility is assessed based on age, income, property criteria, and the lender’s affordability standards.

Age and Residency

Most RIO mortgage providers in the UK require applicants to be at least 55 years old, though some will consider borrowers from the age of 50.

The maximum age at application can range between 85 and 90, depending on the lender.

Applicants must also:

• Be permanent UK residents
• Use the mortgaged property as their main home
• Have a right to reside in the UK

Some lenders may also impose conditions based on how long you've lived in the property or whether you plan to stay in it long-term.

Income and Affordability

Lenders assess your ability to afford monthly interest payments throughout your retirement.

You must have a stable income stream, which can include:

• State pension
• Defined benefit or defined contribution pension
• Lifetime annuities
• Guaranteed investment income
• Rental income
• Certain types of long-term benefits (depending on the lender)

Affordability assessments are usually more rigorous than for lifetime mortgages.

Both sole and joint applicants must pass the affordability test independently.

This means that in a joint mortgage, the surviving partner must still be able to afford payments alone.

Some lenders require a minimum income threshold. For instance, Marsden Building Society specifies at least £17,500 per applicant⁶.

Property Requirements

Not all homes are eligible for RIO lending.

Most lenders prefer standard residential properties that are in good condition and located in well-established areas.

Minimum property value thresholds are common:

• Houses: typically at least £70,000
• Flats or leasehold properties: often at least £100,000

Unusual construction types, properties in poor condition, or those in remote locations may not qualify.

Additionally, leasehold flats may be subject to stricter terms, such as minimum lease length requirements.

Loan-to-Value (LTV) Ratios

Lenders also base eligibility on how much you want to borrow relative to your property's value. This is referred to as the loan-to-value (LTV) ratio.

Most RIO lenders cap the LTV at 50 to 60 percent, although some may go as high as 75 percent for older applicants with strong income.

Higher LTVs are typically offered to older borrowers because the expected duration of the loan is shorter.

Example:
If your property is worth £200,000 and you borrow £100,000, your LTV is 50 percent. The more you borrow, the higher your monthly interest payments will be.

* These figures are for indicative purposes only. 

RIO Mortgage Pros and Cons

Retirement Interest-Only (RIO) mortgages offer a useful middle ground between standard repayment mortgages and lifetime equity release products.

They are particularly well-suited for retirees who want to access equity without selling their home or taking on large monthly costs.

However, these advantages come with some long-term financial considerations.

Advantages of a RIO Mortgage

RIO mortgages provide several key benefits for older homeowners looking to access capital while retaining ownership of their home:

• Lower monthly costs: You only pay the interest on the loan each month, making payments more affordable than with a standard repayment mortgage.
• No fixed end date: The mortgage typically continues until you pass away or move into long-term care, removing pressure to repay the loan on a set schedule.
• Stay in your home: RIOs allow you to remain in your property for the rest of your life, avoiding the need to downsize or relocate.
• Age-inclusive lending: Many lenders offer RIO products without an upper age limit, which is rare among traditional mortgage options.
• Potential inheritance preservation: Unlike lifetime mortgages, where interest compounds, regular interest payments on a RIO can prevent the loan balance from growing, helping to protect more of your estate.

Disadvantages of a RIO Mortgage

While RIO mortgages offer flexibility, they are not without drawbacks. Some of the most important considerations include:

• No reduction in capital: The capital loan remains outstanding for the life of the mortgage and is only repaid when the property is sold. This reduces the value of your estate.
• Repossession risk: If you fail to meet monthly interest payments, your home could be repossessed, as with any standard mortgage.
• Property and borrowing limits: Not all properties qualify, and loan amounts are restricted by age, income, and lender-specific loan-to-value caps.
• Upfront and ongoing fees: Expect to pay valuation fees, legal costs, financial advice charges, and potentially arrangement or exit fees, depending on the lender.
• Affordability checks required: Borrowers must demonstrate that their retirement income is sufficient to cover interest payments for the long term, which can be a barrier for those with limited pensions.

Is a RIO Mortgage Right for You?

A RIO mortgage may be suitable if you have reliable retirement income, want to reduce monthly financial pressure, and aim to avoid the compound interest typically associated with equity release schemes.

However, if you expect difficulty in meeting regular payments or want maximum flexibility with no affordability checks, other options such as lifetime mortgages might be more appropriate.

What Can a RIO Mortgage Be Used For?

Funds released through a RIO mortgage can be used in several strategic ways, depending on the borrower’s financial needs and retirement goals.

Lenders typically place few restrictions on how the capital is used, provided the interest payments remain affordable.

Common uses include:

• Repaying an existing mortgage: Especially when a previous interest-only mortgage is due for repayment and refinancing options are limited.
• Home renovations or adaptations: Such as installing stairlifts, walk-in showers, or making energy-efficient upgrades.
• Supplementing retirement income: To help cover living costs, increased utility bills, or other essential expenses.
• Providing financial support to family: Including deposits for a child's home, education fees, or helping with debt repayments.
• Covering future care costs or insurances: To retain independence without triggering the need to sell the property.

Using funds for discretionary spending or gifting may have consequences for tax, estate value, or eligibility for means-tested benefits.

It is advisable to seek regulated financial advice before making large withdrawals.

How Do You Repay a RIO Mortgage?

The loan is typically repaid when the borrower passes away or moves into long-term care, at which point the property is sold and the proceeds used to clear the balance.

However, there are other repayment options available during the term of the mortgage.

Repayment Options

1. Selling the property

You can choose to sell your home at any time, provided the sale price is sufficient to repay the outstanding balance and any applicable fees.

This is the most common method of repayment when the loan reaches its end.

Before selling, consider how the move may affect your living arrangements, benefits eligibility, and estate planning strategy.

2. Using savings or investments

If you have accessible funds, the loan can be repaid partially or in full using savings, ISAs, or other liquid assets.

This may be suitable for those who receive lump sums through pension drawdowns, inheritance, or investment maturity.

3. Making overpayments

Some lenders allow overpayments without penalty, either as one-off lump sums or regular additional payments.

Overpaying reduces the capital owed and may lower the overall interest cost.

Check your lender’s policy, as overpayment allowances vary.

Some impose annual caps (e.g. 10 percent of the original loan) beyond which early repayment charges apply.

4. Porting the mortgage when moving home

Many RIO products are portable, meaning the mortgage can be transferred to a new property if it meets the lender’s criteria.

This allows flexibility for homeowners downsizing or relocating.

Lenders will usually reassess affordability and may require a new property valuation.

Additional legal or arrangement fees may apply.

5. Switching to a repayment mortgage

In rare cases, borrowers may later qualify for a standard repayment mortgage, particularly if their financial circumstances improve.

This would involve making monthly payments toward both interest and capital.

How to Apply for a RIO Mortgage

The application process for a Retirement Interest-Only mortgage involves several regulated steps to ensure you meet eligibility and affordability criteria.

Most lenders require that applications be submitted through an FCA-authorised mortgage adviser.

Step-by-Step Application Process

1. Research and Initial Advice

Begin by consulting an independent, FCA-regulated mortgage adviser.

They can help assess whether a RIO mortgage is suitable for your circumstances, compare products across the market, and explain associated risks.

2. Product Selection and Affordability Check

Your adviser will help you choose a lender and product based on your age, income, property value, and loan-to-value requirements.

At this stage, lenders carry out an affordability assessment using your retirement income.

3. Application Submission

You’ll complete a full application form, providing:

• Proof of identity (passport, driver’s licence)
• Proof of income (pension statements, annuity documentation, bank statements)
• Evidence of existing assets and liabilities
• Credit history (this will be checked by the lender)

4. Property Valuation

The lender will instruct a professional valuation of your home to confirm its market value.

Some may also carry out a condition report to ensure the property meets lending standards.

5. Formal Mortgage Offer

Once approved, the lender will issue a binding mortgage offer.

This document includes:

• Loan amount
• Interest rate and payment structure
• Fees (arrangement, legal, valuation)
• Repayment conditions and terms

You must review this offer carefully and consult your adviser before proceeding.

6. Legal Work and Completion

A solicitor or conveyancer will handle the legal aspects of the mortgage, including property title checks and registering the lender’s charge against your home.

Once this is complete, the funds are released.

7. Monthly Payments Begin

After completion, you’ll begin making monthly interest payments as agreed in your offer.

Your lender may also provide statements or annual reviews.

The Role of a Mortgage Adviser

Using a qualified adviser is often required by lenders for RIO mortgages and is strongly recommended even when not mandatory.

Advisers help ensure the product suits your long-term needs and that you understand the financial implications.

A good mortgage adviser will:

• Assess your retirement income and borrowing capacity
• Recommend suitable products from across the market
• Explain the terms, risks, and alternatives in detail
• Coordinate with the lender, solicitor, and surveyor
• Provide continued support if your circumstances change

Make sure your adviser is authorised by the Financial Conduct Authority (FCA) and transparent about their fees and any commission arrangements.

Common Questions

In Conclusion

A RIO mortgage can be a flexible financial tool for homeowners in later life who need to access equity while retaining ownership of their home.

For the right borrower, it offers lower monthly costs and greater control compared to more complex equity release products.

Before proceeding, it’s essential to evaluate whether your retirement income can sustain interest payments over the long term, and how the loan may affect your estate, future care needs, and overall financial goals.

As with any mortgage product, regular reviews are advisable. Changes in interest rates, personal income, or property value could make a different product more suitable in the future.

Always consult an FCA-authorised adviser before making long-term financial decisions.