Glossary · UK
What is Retirement Interest-Only Mortgage?
A mortgage for older borrowers where you pay only the monthly interest, with the capital repaid when you die, sell, or move into long-term care.
Full Definition
A retirement interest-only (RIO) mortgage is a later-life borrowing product aimed at older homeowners. You pay only the monthly interest for as long as you live in the property, so the loan balance does not reduce; the original capital is repaid in one go when you die, sell the home, or move into long-term care. Because you must demonstrate you can afford the ongoing interest payments, RIO mortgages are assessed on income rather than just property value, distinguishing them from lifetime mortgages (a form of equity release where interest can roll up). RIO products can let retirees stay in their home, raise funds, or replace an expiring interest-only deal, while keeping monthly costs predictable. The trade-off is that the debt remains and reduces the estate left to beneficiaries, which can interact with inheritance tax planning. Always compare against equity release and downsizing, and seek regulated advice before committing.