I’m over 55, do I choose Equity Release Mortgage or a Retirement Interest Only Mortgage?

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April 28, 2023

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Retirement can be a time of great excitement, but also of uncertainty. One of the biggest financial challenges facing people over the age of 55 is accessing the equity in their homes to fund retirement. An equity release mortgage could be the answer.

There are two main options available to homeowners in the UK are.

Retirement Interest Only Mortgages (RIOs) and Equity Release Lifetime Mortgages (ERLMs). Both of these products can be used to release equity from your home, but they work in very different ways. In this article, we’ll explore the comparable benefits of these two options and help you decide which one might be right for you.

What is a Retirement Interest Only Mortgage (RIO)?

A RIO is a type of mortgage that allows you to borrow money against the value of your home and just pay the interest on the loan each month. This means that your debt will not increase over time. When the last borrower dies or enters long term care, the loan will be repaid from the proceeds of the sale. The capital does not decrease.

What is an Equity Release Lifetime Mortgage (ERLM)?

An ERLM is a loan that allows you to release equity from your home without having to sell it. Instead, the lender will give you a lump sum or regular payments. The loan will be repaid by selling the property when the last borrower dies or when they move into long- term care. The amount you can borrow will depend on your age, the value of your home, and other factors.

Comparable benefits of an Equity Release Mortgage

No repayments required

One of the main benefits of  ERLMs is that you do not have to make monthly repayments. This can be a huge relief for many retirees who may be on a fixed income and do not want to be burdened with additional expenses.


Both RIOs and ERLMs offer flexibility in terms of how you can use the money you borrow. You can use the funds to pay for home improvements, healthcare, travel, or anything else that you need or want.


The money you receive from these equity release mortgages is tax-free, which means that you can use it to supplement your retirement income without having to pay additional taxes.

Inheritance protection

With both equity release mortgages, you can protect a portion of your home’s value as an inheritance for your loved ones. This means that you can release equity from your home without having to worry about leaving your family with nothing.

Which equity release mortgage option is right for you?

Choosing the right equity release mortgage  will depend on your individual circumstances. If you want to maintain ownership of your home and prefer to pay off the interest each month then a RIO may be the right choice for you. On the other hand, if you want to release a larger lump sum of money and do not mind that the interest will compound over time then an ERLM may be more suitable. Either equity release mortgage allow you to enjoy your retirement a little better.

You should consider all your options and speak to a qualified expert before making a decision. They can help you determine which option is most suitable for your needs and circumstances.

Retirement can be a challenging time, but it is also an opportunity to enjoy the fruits of your labour. Whether you choose a RIO or an ERLM, both options can provide you with the financial flexibility you need to enjoy your retirement years to the fullest. By understanding the comparable benefits of each option, you can make an informed decision that is right for you and your family.

Call for more information on 01233 512012

Risk warning: Your home or property may be repossessed if you do not keep up repayments on your mortgage. You may be charged a fee for mortgage advice. This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or if you want your family to inherit it. If you are in any doubt, seek independent advice. 

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