RIO Calculator
How a RIO mortgage works
A retirement interest-only mortgage is structurally simple. The lender advances a loan secured against your home. You pay the interest each month for as long as you live in the property. The capital is repaid in one of three trigger events: you sell the property, you move permanently into long-term residential care, or you die. The estate then repays the loan from the sale proceeds.
Unlike a lifetime mortgage (equity release), the interest never rolls up and compounds. The loan balance stays constant for the life of the product. That makes RIO materially cheaper over a 15–20 year horizon than equity release, provided you can comfortably afford the monthly interest from retirement income.
Who can qualify
RIO products are designed for borrowers aged 55+ who own their home outright or have a substantial existing mortgage they need to refinance into retirement. Lenders apply standard affordability assessment to monthly interest payments based on:
- State pension
- Defined-benefit or defined-contribution pension income
- Annuity income
- Rental income
- Any continuing employment or self-employment income
For joint applications, most lenders stress affordability to ensure the surviving spouse could afford payments alone after the first death — a critical safeguard given the trigger events.
Typical UK RIO lenders
Active RIO lenders include Hodge, LiveMore, Aldermore, Family Building Society, Cumberland Building Society, Leeds Building Society, Marsden Building Society and Bath Building Society. Most price RIOs similarly to standard residential mortgages, with the trade-off being tighter LTV caps (typically 50–65%).
RIO vs equity release
The headline difference is interest treatment. RIO charges interest monthly; equity release rolls it up. Over a 20-year period at 6%, £100,000 borrowed via RIO costs £6,000/year in monthly interest (constant £120,000 total interest over 20 years, capital still owed). The same £100,000 via equity release at 6% rolled up becomes a debt of roughly £321,000 — eating most of the equity from the original property.
RIO is almost always cheaper if you can afford the payments. Equity release suits borrowers who can't pass affordability or who want zero monthly outgoings.