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3. Retirement Interest Only Mortgage
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Retirement Interest Only Mortgage (RIO)

If your client’s existing interest-only mortgage is coming to an end, they could use our RIO mortgage to pay the outstanding balance

Available for clients aged 55+

A fixed interest rate that will never increase.

So your clients always know exactly what their monthly payment is.

Borrow up to 8.5 times annual income.

Potential to borrow more based on your client's income than they can with other mortgage providers, subject to affordability checks.

Interest-only monthly payments.

Your clients only pay the interest each month, and it will never go up.

Our Retirement Interest Only Mortgage is a loan secured against your client's home. As a last resort, their home may be repossessed if they don't keep up with the monthly payments.

Our Retirement Interest Only Mortgage is for:

  • Those aged 55 or over.
  • Living in or buying their own home in England, Wales or mainland Scotland.
  • Property must be worth a minimum of £70,000 or £100,000 for flats, maisonettes, ex-council, ex-housing association or ex-Ministry of Defence properties.
  • Those that can demonstrate their ability to afford the monthly interest payments now and when they're no longer working.
  • Applicant(s) that meet our specific lending criteria. Our affordability assessment will be based upon the lowest income of any joint application in order to ensure that the lowest earning borrower is able to afford the mortgage in the event of the other borrower passing away.
  • Those who want to borrow a minimum of £10,000.

How can it help?

A RIO mortgage exists for the over 55’s who're looking for an interest-only mortgage during retirement years. This could be a new mortgage or to replace their current interest-only mortgage with a mortgage that allows them to continue making interest-only payments for the remaining time that they live in their home.

A RIO mortgage is a loan secured against your client's home. When a client takes a RIO mortgage, at that point they may be able to take a larger mortgage than they currently have, depending on affordability checks. They may choose to use it for items such as:

  • Home improvements
  • Helping family - children and grandchildren.

It's important for your clients to understand that by taking out a RIO mortgage, it may:

  • Impact any inheritance.
  • They may need to make an Early Repayment Charge if they repay the loan early.
  • As a last resort, their home maybe repossessed if they fail to make interest payments.

Our Retirement Interest Only Mortgage is for clients who want to borrow at least £10,000.

Retirement Interest Only Mortgage Product Summary - PDF: 714KB

The amount we’re willing to lend will be subject to an affordability assessment and our Retirement Interest Only Mortgage Lending Policy - PDF: 561KB

You can use our affordability calculator with your client to see how much they can release and their affordability outcome.

Use our calculator

How does a RIO mortgage compare to a Residential and Lifetime mortgage?

  Residential mortgage RIO mortgage Lifetime mortgage
Loan type A loan secured against your client’s home. May be either repayment (capital and interest) or interest-only. A loan secured against your client’s home. An interest-only mortgage. A RIO mortgage is a type of residential mortgage for over 55s. A loan secured against your client's home throughout their lifetime. A lifetime mortgage is for over 55 (or 50 for our Payment Term Lifetime Mortgage).
Interest Interest is charged on the mortgage monthly and your client makes monthly payments. Interest is charged on the mortgage monthly and your client makes monthly payments. Interest is charged on the mortgage monthly. Any unpaid interest charged on the mortgage is added to the loan. This is sometimes called compound or rolled up interest.
Interest rates There are a variety of interest rates your client can choose from. The most common are variable or fixed rate. The interest rate is fixed for a set period or for the duration of the mortgage. The interest rate is fixed for the duration of the mortgage.
Monthly payments Your clients are required to make a monthly payment. Your clients are required to make a monthly payment.

No monthly payments are required during the lifetime mortgage. It's possible with some products to pay the interest in part or whole.

For our Payment Term Lifetime Mortgage, they are required to make monthly interest payments over a chosen payment term.
Loan term The term is fixed for a set period of time. For example, 25 years. There is no loan term. The mortgage lasts until the last borrower dies or moves out of their home into long term care. There is no loan term. The mortgage lasts until the last borrower dies or moves out of their home into long term care.
Affordability Your client's income and expenditure is assessed to ensure they can afford the mortgage. Your client's income and expenditure is assessed to ensure they can afford the mortgage. There are no affordability assessments. Other than for our Payment Term Lifetime Mortgage.
Repayment

Repaid through the monthly payments over the loan term.

With an interest-only mortgage your client only makes monthly interest payments, so your client will need to make a lump sum payment at the end of the mortgage.

 Repaid from the sale of your client's home when the last remaining borrower dies or moves out their home into long term care. The loan and any unpaid interest is repaid from the sale of your client's home when the last remaining borrower dies or moves out their home into long term care.

To find out how to make an application for our Retirement Interest Only Mortgage please use the link below

Apply

To find out how much your client can borrow, by using our calculator below.

Use our calculator

The actual loan amount is determined by an affordability assessment up to a maximum of 60% of their property value. Based on their income up to 8.5x (including retirement income yet to be earned) of lowest earner.

Property eligibility

To apply for one of our Retirement Interest Only Mortgage your client needs to meet our minimum eligibility criteria. Your client must be able to answer yes to the following questions:

  • Is their property made of traditional masonry construction, in a good state of repair, free of any tenancy restrictions, and is it in England, Wales or mainland Scotland?
  • Is their home valued at minimum of £70,000 or £100,000 for flats, maisonettes, ex-council, ex-housing association or ex-Ministry of Defence properties. 

Below is a list of some of the main reasons why the client’s application might have been declined based on their property:

  • The lease is too short yet the purpose of loan is to pay for a lease extension and this wasn't selected.
  • Their property is a bedsit.
  • Their flat is part freehold.
  • Their property has agricultural ties.
  • Age restricted properties.

For more details please see the Later Life Mortgage Suitability Criteria - PDF: 322KB

Applicant criteria

To apply for one of our Retirement Interest Only Mortgage your client needs to meet our minimum eligibility criteria. Your client must be able to answer yes to the following questions:

  • Are they aged 55 or over?
  • Are they living in (or buying) their home and have either a small or no mortgage?
  • Do they want to borrow a minimum of £10,000?

Your client will also need to pass our affordability criteria. For more details please see our Retirement Interest Only Mortgage Lending Policy - PDF: 561KB

Below is a list of some of the main reasons why your client's application might have been declined based on our applicant criteria:

  • Undischarged bankruptcy.
  • Applicant doesn't have indefinite rights to reside in the property.
  • The applicant has Charging Orders registered against them.
  • Property is held in Trust.

For more details please see the Later Life Mortgage Suitability Criteria - PDF: 322KB

Energy Saver Cashback offer

Helping your clients

We’ll provide 10% cashback on the total cost of qualifying energy efficiency home improvements, up to £1,000 on an initial advance.

See our offer
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Retirement Interest Only Mortgage calculator

Our affordability calculator will give you an indication of the amount your client could borrow.

It's been designed for you to work through the questions with your clients, during your client meetings and telephone calls.

Please make sure you complete the mortgage loan amount, income and monthly payments as accurately as possible.

Once you've received a figure, you'll need to complete a full Decision in Principle to receive the exact amount your client can borrow. This is subject to the information you provided, plus the results of a credit reference check. Applications are subject to our standard lending criteria, status and financial standing.

The calculator gives an estimate of affordability and is not a guarantee of lending. Additional evidence may be required.

A Retirement Interest Only Mortgage is a loan secured against your client's home. As a last resort, their home may be repossessed if they don't keep up with payments.

Please make sure you click on the information buttons to understand what amounts you need to include for your client.

 

Quoting and services

Available Portals

Quotes for our Retirement Interest Only Mortgage (RIO) are available through the listed portals.

Ready to apply?

Log in to start the application process for your client's RIO product to start an illustration and submit an application.

Apply now

Application process

We've outlined the steps you take when you're ready to apply for your client's application with us for a Retirement Interest Only Mortgage.

Application process

Register for online services

You'll need to register with Legal & General Home Finance to produce illustrations and submit applications.

Register now

Key documents

Our product documents
Retirement Interest Only Mortgage Product Summary pdf - 713.54 KB
Retirement Interest Only Mortgage - All you need to know pdf - 6.4 MB
Retirement Interest Only Mortgage New Lending Standards pdf - 560.8 KB
Retirement Interest Only Mortgage Tariff of Charges pdf - 616.76 KB
Retirement Interest Only Mortgage Terms and Conditions pdf - 292.79 KB
Later Life Mortgage Suitability Criteria pdf - 341.83 KB
RIO Process and Legal Fees Guide pdf - 1.54 MB
Completing an income assessment for RIO pdf - 1.69 MB
Assessing RIO affordability - Pensions in payment pdf - 830.66 KB
Assessing RIO affordability - Pensions not yet in payment pdf - 1.31 MB
Terms of Business pdf - 338.04 KB

More about later life mortgages

Find out more about our later life mortgage options.

Compare later life mortgages

Which later life mortgage is right for your client?

Lifetime Mortgages (a type of equity release) and Retirement Interest Only Mortgages are sometimes grouped together as 'later life mortgages' or 'later life lending' products.

While similar and often used for similar purposes, these are different products and it's important to understand the differences between the two. There may be cheaper ways for your client to borrow money.

Compare later life mortgages

Lifetime Mortgages

A type of equity release

A lifetime mortgage is a loan secured against your client's home. Depending on the type of lifetime mortgage you choose, they may not need to make monthly payments.

The amount borrowed and the added interest isn't usually repaid until they die or move out of the home into long-term care. However, there may be cheaper ways to borrow money.

Our Lifetime Mortgages

Need help?

You can contact our services teams to help you with your query.

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