A Retirement Interest Only Mortgage (RIO) might 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.
RIO mortgages: how do they work?
RIO mortgages don’t roll your interest up, and there’s no set end date to repay the balance. Unlike lifetime mortgages you pay interest every month. So, you don’t have to worry about paying back the capital borrowed, 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 have an end date. It keeps going until a life event occurs, like going into long-term care or passing away. You can 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.
- RIO 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.
For more information read our RIO mortgage frequently asked questions.
Where do MDFS Mortgages Fit in?
RIO Mortgages are part of MDFS Mortgages. Starting with your first online video meeting, all the way to the completion of your loan, MDFS Mortgages provides the highest level of service.
Our goal is to make your journey as easy as possible. The MDFS team work with you every step of the way. You’ll have direct access to mortgage brokers who have been helping people just like you for over 30 years. There’s no need to worry, all MDFS advisers are licensed and regulated by the FCA
You want honest, straightforward advice that’s easy to understand.
MDFS have got you covered when it comes to the horrible paperwork. They handle all your administration processes making sure that your mortgage application process goes smoothly.
You’ll also get online video advice throughout, plus a service via phone, email, and live chat. Since you’re busy, you can schedule an appointment anytime between 8am and 8pm.