Retirement Interest Only (RIO) Mortgage Calculator

How Much Cash Can You Release With a RIO Mortgage?
Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui
Use Our RIO Mortgage Calculator To Compare The Whole Market. Find the Lowest Retirement Interest Only Mortgage Rate Now. Here is the Secret to How…

Retirement Interest Only (RIO) Mortgage Calculator

Are you nearing retirement or already retired, and have a home in the UK? Is cash tight in 2022?

Did you know that your property value could be the key to releasing you from stressing about pension finances?

A retirement interest-only mortgage allows you to use the cash locked inside your home.

But, how much equity could you be eligible to lock through a retirement interest-only mortgage?

Through this article, you’ll discover:

  • An introduction to RIO mortgages.
  • How a retirement interest-only (RIO) mortgage calculator works.
  • Why it’s essential to use a RIO calculator.
  • How an RIO mortgage differs from equity release.

As financial experts, our role is to keep you up-to-date with all options of the latest retirement financial products on the market.

As one of the newest retirement mortgages on the market, an RIO is potentially a brilliant option for you, your family, and your property.

Here’s more!

Before You Start Reading….

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How to Use the Retirement Interest-Only Mortgage Calculator

To use our retirement interest-only mortgage calculator, you’ll need to provide the following information:

  • An estimated property value.
  • The age of the youngest homeowner (if you opt for a joint RIO mortgage).
  • Your name so that we know who we’re sending a maximum loan estimate to.
  • Your phone number to SMS your results.
  • Your email address.

In addition to receiving an estimate of the maximum amount you can borrow, you’ll also get the opportunity to have an obligation-free consultation with an equity release expert.

While we provide an estimate, an accurate quote will depend on your own circumstances.

An Introduction to a Retirement Interest-Only Mortgage

Retirement interest-only mortgages are loans secured against your primary residence designed for older homeowners.

RIO mortgages are available to UK homeowners over the age of 55 who may be struggling to qualify for a traditional mortgage or interest-only mortgage.

Unlike with a lifetime mortgage, monthly interest repayments are required, and if you fail to do so, your home may be repossessed.1

Therefore, you’ll need to have a secure form of pension income, like a defined benefit pension.

The Equity Release Council does not regulate RIO mortgages as they are not considered equity release, but legitimate lenders are overseen by the Financial Conduct Authority (FCA).

What are the Pros & Cons of Retirement Interest-Only Mortgages?

The biggest pro of a retirement interest-only mortgage is that it usually costs less than other retirement mortgages.

The biggest con of a retirement interest-only mortgage is that your home may be repossessed if you fail to cover the monthly payments.

Here’s more benefits and pitfalls of an RIO mortgage:

The Advantages of a Retirement Interest-Only Mortgage

  • It’s usually cheaper than equity release and a lifetime mortgage because you’re obligated to cover monthly interest repayments.
  • You’ll use up less of your property value, leaving a greater inheritance for your heirs.
  • RIO mortgages are regulated by the Financial Conduct Authority (FCA)2.
  • You can live in your home until you die or move into long-term care, as long as you keep up with the monthly payments.
  • A retirement interest-only mortgage allows you to carry a regular mortgage into retirement.
  • You’re not obligated to get support from a financial adviser or retirement mortgage expert adviser.
  • With no compound interest for a retirement interest-only mortgage, the loan amount won’t erode your entire property value.
  • Some lenders allow you to pay back up to 10% of the capital annually.

The Disadvantages of a Retirement Interest-Only Mortgage

  • RIO mortgages are not regulated by the Equity Release Council.3
  • Your home may be repossessed if you fail to cover the obligatory monthly interest repayments.
  • You’ll use some of the equity tied into your home, leaving less of an inheritance.
  • You’ll need to pass affordability checks to be eligible for an RIO mortgage.
  • The amount you can borrow is also based on your retirement income.
  • An RIO mortgage will sometimes come with fixed and then capped variable interest rates, meaning that your payments might increase with time.
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How Much Money Can You Release with a Retirement Interest-Only Mortgage?

RIO mortgages usually allow for a maximum loan amount of up to 50% of the home’s value, but this is dependent on the lender, your age, income, and property price.

This is generally less than with a repayment mortgage, where you may borrow as much as 65%.

However, the maximum loan amount you receive may differ from one lender to another.

Therefore, despite it not being compulsory,

We suggest that you still seek guidance from a whole market financial adviser who can help you find the best RIO mortgage deal or help you consider if there’s a better option, like equity release, for you and your family.

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Are There Monthly Interest Payments on Retirement Interest-Only Mortgages?

Yes, there are monthly interest repayments on retirement interest-only mortgages.

Once your mortgage interest rates are determined, you will pay these back each month.

Therefore, you will need proof of retirement income.

While some plans give you the option to pay back up to 10% of the capital manually, your loan amount is usually covered from the sale of your property if you die or move to long-term care.

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Got Questions? Here’s Your Answers!

What Is the Maximum LTV with a Retirement Interest-Only Mortgage?

What Must I Do if I Can’t Pay Off My Retirement Interest-Only Mortgage?

What Is the Difference between a Retirement Interest-Only Mortgage and a Lifetime Mortgage?

In Conclusion

Retirement interest-only mortgages are the newest product of the retirement mortgage scheme world.

If you have retirement income to cover the interest, they’re a fantastic option for living a financially stress-free retirement, while still leaving money in your inheritance.

A similar product to consider is an interest-only lifetime mortgage.

We strongly suggest that you weigh up all your options and speak to a financial adviser before making any final decisions.

What are you waiting for? Try our RIO mortgage calculator for free today!

How Much Can You Release?

Use the FREE Calculator Below 👇


Equity Release Calculator

Value of Your Home?


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