Lifetime mortgage vs RIO: which is right for you?
An honest, plain-English comparison to help you see which later-life mortgage fits your circumstances.
Lifetime mortgage vs Retirement Interest-Only
The two most common ways to borrow against your home in later life work very differently. Here is an honest, plain-English comparison.
| Lifetime mortgage | Retirement Interest-Only (RIO) | |
|---|---|---|
| Minimum age | 55 | Usually 50, depending on the lender |
| Assessed on income? | No. Based on age, property value, health and location | Yes. Based on income, or survival income for joint applicants |
| Monthly payments | Not required (you can choose to pay some or all of the interest) | Required. A monthly interest payment is agreed |
| What happens to the balance | Can roll up over time if you make no payments | Stays level while you pay the interest |
| If payments are missed | Not applicable if you make no payments | Your home is at risk of repossession |
| Repaid when | You pass away, sell, or move into long-term care | You sell, refinance, move into long-term care, or pass away |
| Drawdown for future needs | Available on most plans | Not available; a further advance needs a new assessment |
When each tends to suit
Lifetime mortgage
Tends to suit when...
- You do not want the commitment of a monthly payment.
- Your income would not support an affordability-assessed loan.
- You value the flexibility of a drawdown facility.
- As an Equity Release Council product, it carries a no negative equity guarantee.
Retirement Interest-Only
Tends to suit when...
- You have a reliable, evidenced retirement income.
- You are comfortable making a monthly interest payment.
- You want to keep your balance level rather than let it grow.
- Because it is affordability-assessed, your income and credit history matter.
The honest answer
There is no universally "better" product. The right one is the one that fits your circumstances, and we will happily tell you if neither is right and a traditional mortgage would serve you better.
To estimate figures, use our calculator, and to talk it through, speak to Craig.
"The right lifetime mortgage or RIO is the one that fits your circumstances, and we will always tell you honestly which route that is."
Lifetime mortgage vs RIO, your questions answered
Do I have to make monthly payments with either product?
Does either protect me from negative equity?
Can I change from one to the other later?
Whole-of-market advice on retirement interest-only mortgages
For retirement interest-only, term interest-only, and interest-only mortgages for the over-50s, we provide independent, whole-of-market advice. Craig Oliver brings three decades in later-life lending and was named Best Individual Adviser at the 2018 Equity Release Awards. Your initial advice is at our cost. A fee of a maximum of £1,495 is only payable if your case completes.
A retirement interest-only mortgage is a loan secured against your home that requires monthly interest payments. If you proceed with a mortgage that requires payments to be made, your home may be repossessed if you do not keep up repayments on your mortgage. Any figures shown are an indicative guide only and are subject to a full affordability assessment and advice. Unless you decide to go ahead, our service is at our cost. Only if your case completes would our advice fee of a maximum of £1,495 be payable. Other lender & solicitor fees may apply.