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Getting a Retirement Interest-Only Mortgage in the UK

Everything you need to know about getting an interest only mortgage when you’re retired.

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 19, 2021

Getting a Retirement Interest-Only Mortgage in the UK

If you’re retired and wondering what mortgage options there are for older borrowers, the good news is that there are plenty of lenders offering a specific range of interest-only mortgages for over 55s, 60s, 65s and beyond.

These products, which are known as retirement interest-only mortgages (or RIOs), allow retirees to remortgage existing interest-only mortgages or release equity capital from their property.

To save you the time and hassle, speak with an expert, like those we work with. By working with an independent broker, they’ll be able to find suitable products from a wide range of lenders to provide you with tailored deals.

Call us on 0808 189 2301 or make an enquiry to get started.

What is a retirement interest-only mortgage?

RIO mortgages are available for over 55s and are similar to standard interest-only mortgages, in the sense that you make regular payments to cover the interest – the difference is that there is no end date.

The loan is only liable for repayment once the mortgage holder dies, moves into long-term care or sells their house, with the outstanding capital debt (invariably) deducted from the proceeds of the property sale.

Some lenders will require applicants to demonstrate minimum income levels to qualify for a loan, while others will judge prospective borrowers based on their ability to maintain interest repayments. Different lenders will offer different mortgage types (such as fixed-rate or variable products) at different interest rates.

Are there any age restrictions on retirement interest-only mortgages?

Some lenders may impose age restrictions, but many who offer retirement interest-only mortgages accept a minimum age of 55 with no maximum age at application. Loan-to-value ratios, term length and pension income amount will also vary from lender-to-lender.

You may be required to have a lasting power of attorney (LPA) in place to be eligible to qualify for this mortgage type (in Scotland this is called a continuing power of attorney).

Take a look at the age brackets below for more information. You can also make an enquiry and we’ll match you with a broker who can offer recommendations.

Interest-only mortgages for over 55s

As long as you meet the lender’s eligibility criteria, you should be able to qualify for a mortgage. Different lenders have different approaches to interest-only mortgages for over 55s but, broadly speaking, the rates, criteria and policies are typically similar.

Many providers will typically allow eligible borrowers over 55 to take out loans between £30,000 to £500,000 (though other lenders will offer above and below these amounts), with rates varying depending on the amount you wish to borrow, term length, your age, your credit rating and other personal factors.

Interest-only mortgages for over 60s

Some lenders offering retirement interest-only mortgages set the minimum age higher at 60 instead of 55.

Lenders will typically wish to see your pension statement as evidence of income. Some will state a minimum income from your pension, for example £30,000 per year.

Interest-only mortgages for over 65s

Again, it is indeed possible. Age requirements for retirement products can vary across the lender spectrum. Some peg their minimum lending age limit lower than 65, so they’ll offer interest-only mortgages to over 55s while others require applicants to be at least 60 and some won’t do business with anyone under 65.

The advisors we work with can go over all of the best interest-only mortgage options for over 60s and connect you with the right lender if you make an enquiry.

Interest-only mortgages for over 70s

It’s possible to get a retirement interest-only mortgage if you’re over 70. Maximum age limits can also differ substantially from lender to lender – some will offer interest-only mortgages for over 70s but put an upper-age cap of 75 on interest-only retirement mortgages, others at 80 years or 85. Many lenders who provide this loan type set no upper age limit on mortgage borrowing at all.

If your age exceeds 80 or 85 at the point of application, you may need additional underwriting approval. Some lenders will also set the maximum age at term end without pension proof at 75, so it’s especially important to prepare evidence of your pension income if you’re looking to pay off your mortgage beyond this age.

Customers should also be aware that some lenders will require borrowers to repay their mortgage loan by a certain age while the majority of others will allow it to be paid off once the holder dies.

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How much can I borrow with a retirement interest-only mortgage?

Again, this is defined according to which lender is used. For example, there are lenders that will lend up to 50% of the value of the property at a maximum of £500,000 while others will lend up to 55% LTV with a maximum loan of £1.25 million. Some lenders will also impose a minimum property value – the lowest of which being £60,000.

Can retirement interest-only mortgages be repaid early?

Once again, this depends on the lender. For example, a number of lenders will allow borrowers to overpay interest-only mortgages for pensioners by up to 10% on fixed rate mortgages each year and as much as they like on standard rate loans without penalty, although others will charge an early repayment fee for any amount over 10% of the loan.

Conversely, some building societies and the challenger banks will allow customers to overpay as much as they want without incurring fines and have no early repayment penalty.

What are the pros and cons of a retirement interest-only mortgage?

As with any loan of this type, prospective customers will need to evaluate whether an interest-only mortgage is right for their circumstances and to take some time to consider their options by referencing both the advantages and disadvantages that they offer.


Below are some of the pros associated with retirement interest-only mortgages:

  • Loan amounts remain stable so long as interest rate repayments are maintained.
  • Allows borrowers to release equity from their property.
  • Allows borrowers to make over-payments on loan amounts and reduce their debt.
  • Increase the probability of passing on inheritance amounts to children or grandchildren (especially when compared to Lifetime mortgages- see below).
  • Compound interest charges do not affect these types of mortgage.
  • Monthly payments are usually lower than for standard repayment mortgages and invariably cheaper than most Lifetime mortgages.
  • Interest-only payments allow customers to minimise their outgoings and to prioritise other financial needs or considerations.
  • Removes unwanted financial pressures for those who wish to avoid downsizing. Offers flexibility for those who may wish to consider it in the future.
  • Could provide a lifeline for existing interest-only mortgage holders who have been unable to remortgage with another lender (see below).


Below are some points to consider if you’re considering taking out an interest-only retirement mortgage, especially if you’re over the age of 60.

  • Borrowers need to pass affordability checks or to demonstrate minimum annual income sources in order to qualify.
  • Not suitable for customers with unstable or less secure incomes or for those with property values which fail to meet minimum requirements. Moreover, some lenders will restrict the types of income they will consider for applicants.
  • The borrowers home will ultimately need to be sold in order to repay the loan.
  • Mortgage rates can be more expensive than for standard repayment mortgages.
  • Mortgage borrowers who choose a standard variable rate package could see their monthly payment rise if interest rates increase.
  • Not all brokers who advise on interest-only mortgage products are professionally qualified to advise customers on equity release options. This has prompted widespread concerns of a deepening ‘advice gap’ and the possibility that some customers could choose products which are unsuitable for their needs on the basis of this ‘compromised’ advice.

How does an interest-only mortgage affect inheritance?

As previously noted, the fact that borrowers are often allowed to overpay on their repayment schedules means that debts could be minimised or even cleared by the time the property is sold.

Alternatively, the option to release equity from a property means that homeowners who wish to help their children or grandchildren would be in a position to pass on early inheritance amounts if they wished to do so, while the absence of rolled up interest charges on loans would ultimately mean that there would be more to leave dependants than with a Lifetime mortgage.

If in doubt, however, customers should speak with an expert advisor.

Will my bad credit affect me getting an interest-only mortgage?

Because none of the three credit reference agencies used by lenders to underwrite applications (CallCredit, Equifax and Experian) hold financial information for longer than six years, customers with previously poor credit histories who have maintained payments on loans or credit cards in that period could still qualify for a RIO mortgage (assuming, of course, that they can demonstrate an ability to repay interest charges).

For example, if you’re aged 65 with a satisfied court county judgement (CCJ) with no other adverse and wish to apply for a retirement interest-only mortgage, you could be accepted by a lender. However, they’ll typically require a satisfactory explanation for the CCJ(s) along with evidence that it has been satisfied.

Bear in mind that for financial bad credit incidents that have incurred within six years may need to consider an alternative means of finance (such as equity release options).

Speak to an expert for more information.

What if I already have an interest-only mortgage?

One of the groups of people which are most likely to benefit from the introduction of these retirement interest-only products are those with existing interest-only deals, especially those that are coming to the end of their terms.

Research published by the Financial Conduct Authority, for example, revealed that there were 1.67 million outstanding interest-only mortgages (or 17.6% of all outstanding mortgage accounts) in the UK, with one in nine of these customers aged 65 or above.

The financial watchdog conceded that current EU mortgage rules (which have virtually outlawed interest-only retirement lending across the continent) had left many thousands of elderly or financially vulnerable customers with almost no means to repay these debts.

These included disqualifying pensioners from selling their homes or moved into full-time care to service outstanding loans and prohibiting customers with the up-to-date repayment records or the financial means to keep up regular monthly interest payments from pursuing this option.

Which is why the FCA decided to relax these rules from March 2018 onwards and to allow interest-only customers who are stuck with an existing interest-only mortgage to remortgage onto an interest-only mortgage based on pension income with another lender. The only problem here, of course, is if these customers fail to meet income or property value requirements.

Speak to an expert about interest-only mortgages

If you have questions and want to speak to an expert for the right advice, call us on 0808 189 2301 or make an enquiry. We’ll then match you with an expert advisor who can offer you advice and find the best deals for your circumstances.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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