Rio Mortgages

How does a Retirement Interest-Only mortgage work?

Retirement Interest-Only (RIO) mortgages can be a great option for borrowing later in life. RIO mortgages have monthly interest payments and are only repaid if you move into long-term care or die. You’re assessed for an RIO mortgage to make sure the monthly payments are affordable.

If you’re over 55 and having trouble getting a standard residential mortgage, or want to reduce your current mortgage payments, a retirement interest-only mortgage could be for you.

How do Retirement Interest Only Mortgages work?

RIO mortgages don’t roll interest up and there can be no set end date to repay the balance. You pay interest every month. So, you don’t have to worry about paying back the capital, you only have to pay back the amount you borrowed when the time comes.

Would a RIO mortgage be right for me?

A RIO mortgage has many benefits, like cheaper monthly payments and staying in the house you love. RIOs also have other benefits.

The advantages of a RIO mortgage:

Every month you pay off the interest, so it doesn’t add to your loan. All you’ll owe at the end is what you borrowed.

You don’t have to be retired, just 55 and older.

A RIO mortgage doesn’t always have an end date. It keeps going until a life event occurs, like going into long-term care or passing away. You can normally stay in your property as long as you want until the life event happens.

A RIO mortgage can be used if your current Interest-Only mortgage is coming to an end and you don’t want to pay off the capital balance, or you’re not ready to downsize or move into retirement accommodation.

Retirement Interest Only mortgages are also a good option if you want to free up equity to make improvements to your home or improve your retirement lifestyle.

The downsides are:

RIO mortgages are Interest-Only mortgages, so you won’t be paying anything off.

Until the end of the term, you need to pay the interest.

A RIO mortgage doesn’t always have a set end date, but the mortgage still has to be paid. This usually happens when you pass away or if you go into long-term care. It means you might not be able to leave your house to your family and your inheritance might be less.

You need at least 25% equity in your house.

When you take out a RIO mortgage with your spouse or partner, you’ll need to show that both of you can afford the monthly payments if one of you passes away.

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