Important information
Royal London has chosen to introduce its customers to the experts at Royal London Equity Release Advisers. They will provide advice on equity release products from across the whole market and will make a recommendation to you based on your personal circumstances.
You will not receive advice or any recommendation from Royal London. The information on this page has been provided by Royal London Equity Release Advisers to help you understand more about releasing equity.
Why choose Royal London Equity Release Advisers
Whole of market advice to compare different mortgage options
You still own 100% of your home
No-obligation advice and no fees unless a mortgage is taken out
What is a Retirement Interest-Only Mortgage?
A Retirement Interest-Only Mortgage (also called a RIO) is a mortgage available to UK homeowners over the age of 50, where you'll need to pay back the interest each month. It's a long-term loan that lets you borrow a lump sum against the value of your home.
You could use a RIO to buy a new home, refinance an existing one or fund your retirement.
How does a Retirement Interest-Only Mortgage work?
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Borrow a lump sum
You borrow a tax-free lump sum of money secured against your home.
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Pay interest monthly
You'll only need to pay the interest each month, so your monthly payments could be lower than with a traditional mortgage.
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Choose your interest rate
You could choose a fixed interest rate, so you'll know how much your monthly payment will be during the fixed period.
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Repayment on sale
The remainder of the mortgage will be paid back when your property is sold, or once the last surviving homeowner dies or goes into long-term care.
Who can get a Retirement Interest-Only Mortgage?
You could apply for a RIO if you meet these conditions:
You’re aged 50 or over
You own or want to own a UK home
You’re able to pass an affordability check
What are the costs of a Retirement Interest-Only Mortgage?
There are several potential fees to consider with a Retirement Interest-Only Mortgage. When applying for one, you might have to pay the following charges:
- Valuation fee: You may have to pay to get your home valued so the lender knows it is appropriate security for the loan.
- Legal fees: There may also be fees a conveyancer to run title checks, property searches and Land Registry checks.
- Advice fee: Royal London Equity Release Advisers will charge an advice fee of £1,690 only if you take out a mortgage with their help.
For more information about fees, charges, and other costs, read our guide How much does equity release cost?
Retirement Interest-Only Mortgages in practice
Here’s an example of how a RIO could work for homeowners.
Mrs. Smith was interested in remortgaging her home.
- She is aged 73.
- Her home is worth £250,000 with a £30,000 mortgage.
- She has a full state pension and a private pension of £15,000 annually.
After meeting with an adviser, she was recommended a product with a fixed for life rate of 6.33%. With this, her monthly payments would be approximately £158.25. By only paying interest, she was saving money each month with lower payments compared to her current mortgage.
As part of the application process, Mrs. Smith needs to pass affordability and credit checks before she can take out this product.
This is an illustrative example of the potential costs. Available interest rates will be based on your personal circumstances and are best determined with the help of an adviser.
How to apply for a Retirement Interest-Only Mortgage
You can start off the process by speaking with the Royal London Equity Release Advisers UK-based Information Team. Here's a step-by-step explanation of how it works.
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Speak with the team
Contact Royal London Equity Release Advisers to schedule a no-obligation appointment with an expert adviser. They'll answer any questions you have.
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Explore your options
At your appointment, your adviser will talk you through everything you need to know and all the different features of a RIO.
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Submit your application
If you'd like to proceed, your adviser will help you fill out your application.
Important things to know
- You’ll need to pass affordability checks to determine if you can get a RIO, and how much you could borrow.
- Because a RIO involves making required payments to clear the interest monthly, there’s a risk of repossession if you miss any monthly repayments.
- A RIO will reduce the value of your estate and could affect your entitlement to means-tested benefits.
- You should think carefully before securing other debts against your home.
Other mortgage products
Talk to the Royal London Equity Release Advisers Information Team
If you need help or want to ask a question, you can call them on
0800 023 9311
Lines are open Mon 08:30am to 6pm and Tues to Fri 08:30am to 5:30pm (excluding bank holidays).
Retirement Interest-Only Mortgages FAQs
What happens if you move to a new property?
If you move home, you may be able to take your Retirement Interest-Only Mortgage with you. It will be subject to the lender's criteria, however.
Can you remortgage to a new product in the future?
Yes, you can remortgage in the future if you want to. There may be early repayment charges that apply so speak with an adviser if this is in your plans.
Can you borrow more later in life?
Whether you can borrow more in the future will depend on a few factors, including the amount you have borrowed and the outcome of an affordability assessment. If you borrow the maximum available to you then it may not be possible to remortgage and borrow more in the future.
What if you can no longer afford your payments?
If you can no longer afford your payments, it is essential that you speak to your lender as soon as possible. Missing payments may put your home at a risk of repossession. If you communicate with your lender, they can work with you to consider alternative options. Speak with your adviser too as you may be able to consider remortgaging to an equity release product.
Will your inheritance plans be affected?
A RIO will reduce the value of your estate, so there will be less available to leave as an inheritance in the future. However, you might want to consider using the money that you borrow to gift an early inheritance.
Are there any tax implications to consider?
No tax will be charged on the money that you borrow. However, there may be tax implications on how you use the money. For example, if you make a gift and die within 7 years, inheritance tax may still be due on it.
Please note that tax treatment will depend on your individual circumstances and current tax rules can chance in the future. Tax advice is not regulated by the Financial Conduct Authority or the Prudential Regulation Authority.
Are all properties eligible?
What properties are eligible will be best discussed with an adviser. Some lenders may have restrictions on homes of non-standard construction, for example.
More equity release options and guides
“Royal London Equity Release Advisers” is a trading name of Responsible Life Limited. Responsible Life Limited uses Royal London branding under licence from Royal London Marketing Limited. “Royal London”, the “Royal London logo” and “Royal London Equity Release” are registered trade marks of The Royal London Mutual Insurance Society Limited. Royal London Marketing Limited and The Royal London Mutual Insurance Society Limited do not provide regulated mortgage advice.
Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register under reference 610205. Registered in England and Wales under company number 07162252. Registered office: Princess Court, 23 Princess Street, Plymouth PL1 2EX.
Responsible Life Limited is a wholly owned subsidiary of the Royal London Group who may benefit if you choose to take regulated mortgage advice. Being a wholly owned subsidiary of the Royal London Group does not alter Responsible Life Limited’s regulatory responsibilities.
If you choose a mortgage with required payments during your lifetime then your home may be repossessed if you do not keep up with the payments. Borrowing with a Lifetime Mortgage or Retirement Interest-Only Mortgage will reduce the value of your estate. Receiving a cash lump sum may also affect your entitlement to means-tested benefits. Think carefully before securing other debts against your home.
To understand the features and risks, ask for a personalised illustration. Your adviser will talk through the setting up costs of a mortgage. Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,690.