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Retirement interest-only

Over 50s

Want to borrow in later life? Try a Retirement Interest-Only mortgage

Our award-winning team of mortgage advisors can help you explore Retirement Interest-Only mortgages and other lending options, so you can discover the best option for you and your family.

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How does it work?

Retirement Interest-Only mortgages, also known as RIO mortgages, are loans specifically for retirees or older borrowers who are looking to unlock money from their homes or manage their finances in retirement. These mortgages allow you to borrow money against the value of your home, while making interest-only payments throughout the mortgage term. The loan will be repaid when the home is sold, when you move into long-term care, or you pass away.

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Things to consider

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What are the benefits?

Borrow into retirement

Retirement Interest-Only mortgages are specifically created to allow retirees and older homeowners to borrow into later life when age restrictions cross out alternatives.

Manageable monthly payments

As you will only be paying the interest portion of the mortgage, the repayments on a RIO mortgage are lower than those on a normal repayment mortgage.

Access equity in your home

Retirement Interest-Only mortgages can provide a way to unlock equity in your property, which you can then use for travel plans, home improvements or even helping a loved one buy a home.

You can stay in your home

A Retirement-Interest Only mortgage allows you to unlock money from your property without having to downsize or move. So you can stay in the home you love, while still accessing the equity you need.

Flexibility with the repayments

There are some RIO deals that let you to repay your loan value or overpay to reduce the size of your debt. This can be a good option if you are worried about repaying the total loan sum in retirement.

Some deals are portable

You may be able to move home and port your Retirement Interest-Only mortgage to another mortgage provider, up to the outstanding loan value. This could allow you to avoid any early repayment fees you may have incurred if you repaid it early or remortgaged.

Risks and considerations

Affordability is based on the lowest earner.

When assessing your affordability, lenders will typically base their calculations on the lowest earner of the household. If this limits your borrowing, you could consider a standard interest-only mortgage, which looks at the affordability of joint applicants instead.

You must be over 55 to be eligible

You must be at least 55 or sometimes 60 years old to be eligible for a Retirement Interest-Only mortgage, depending on the lender you go for. However, some lenders have a higher age threshold than this. If you do not meet a lenders’ age requirements, an alternative is to consider an Enhanced interest-only mortgage.

Your home’s value needs to be sufficient

Providers can have minimum property value requirements to ensure that your home provides adequate security for the mortgage. If your home does not meet these requirements, you may not be able to get a Retirement Interest-Only mortgage.

Other interest-only deals may be a better option

With a RIO mortgage, you pay a premium for having a mortgage with no end date. Instead, the loan will continue until the home is sold, you pass away, or move into long-term care. This can mean that rates on RIOs are higher than other interest-only mortgages. This can mean it's better to go for another interest-only option to access a lower mortgage rate.

The loan balance remains

 Because you only pay back the interest each month, the full repayment of the loan is deferred until the sale of the property, when you move into long-term care, or you pass away. If you become concerned about repaying the full loan, get in touch with your lender. There are ways to reduce the loan size, such as paying off some of the debt using savings or investments.

Your estate will be less

As you are sacrificing some of your future estate, if you don't repay this yourself and it’s repaid when you die or move into long-term care, this will reduce any inheritance you can leave to your loved ones.

Why Tembo?

We help buyers, movers and homeowners discover how they could boost their affordability in 3 simple steps. It’s why we’re the UK’s Best Mortgage Broker.

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The application process

4 simple steps to getting a Retirement Interest-Only mortgage

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Make a Tembo plan

Create your own Tembo plan to book in a free, no-obligation call with one of our award-winning team. They can then see what deals you are eligible for from across our panel of lenders.

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Talk to an expert

Once the Tembo team have completed the qualification process, we’ll cover off any questions you might have about any of the deals we advise on.

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Apply for your new deal

Next, your dedicated advisor will undertake full affordability checks to prepare the mortgage application. Then we’ll submit it on your behalf!

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Make the switch

Your Tembo advisor will be on hand to ensure everything runs smoothly, so you can move onto your new deal as quickly as possible.

Looking for an alternative?

There are a few reasons why you might want to borrow into retirement. If you’re looking for something more specific, try these options.

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Retirement

Enhanced Interest-Only mortgage

Borrow up to 6-7x your income with an Enhanced Interest-Only mortgage.

See details

Retirement

Long-Term Fixed Rate mortgage

Fix your interest rate for your whole term with a Long-Term Fixed Rate mortgage.

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Remortgage

Release equity or borrow more

Remortgage to release money from your property or borrow more.

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