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Equity Release vs Retirement Interest-Only Mortgages: What Is the Difference?
Equity release and retirement interest-only mortgages both let you borrow against your home in later life. Here is how they differ.
Checked by Suzanne Bradshaw, Director, Mortgage & Finance Arena. Last updated September 2026.
If you are over 55 and want to borrow against your home, you will often choose between two options: a lifetime mortgage, which is the most common type of equity release, and a retirement interest-only mortgage, or RIO. Both let you stay in your home and both are repaid when you die or move into long-term care. The big difference is whether you pay the interest each month.
The short answer
- With a RIO mortgage, you pay the interest every month, so the debt does not grow. The lender must check you can afford the payments for life.
- With a lifetime mortgage, you do not have to pay anything each month. The interest is added to the loan, so the debt grows over time.
Side by side
| RIO mortgage | Lifetime mortgage | |
|---|---|---|
| Monthly payments | Yes, you pay the interest | No, but you can choose to pay some |
| Does the debt grow? | No, as long as you pay the interest | Yes, unless you pay the interest |
| Affordability checks | Yes, on your income in retirement | No, it is based on age and home value |
| Minimum age | Often 55, varies by lender | 55 |
| Interest rate | Often lower | Often higher, fixed or capped for life |
| No negative equity guarantee | Not always | Yes, on plans that meet Equity Release Council standards |
| Risk if you stop paying | Your home could be repossessed | None, as payments are optional |
| Effect on inheritance | Smaller, as the debt stays the same | Larger, as the debt grows |
How does a RIO mortgage work?
A RIO mortgage is like a normal interest-only mortgage, but with no end date. You pay the interest each month. The loan itself is paid back from the sale of your home when the last borrower dies or moves into long-term care. Read our guide to retirement interest only mortgages for more.
The lender checks that you can pay the interest from your pension or other income. If you are a couple, it also checks that one of you could still pay if the other died. This check can limit how much you can borrow.
How does a lifetime mortgage work?
You borrow a lump sum, or take a cash reserve to draw from later. With most plans you pay nothing each month and the interest rolls up. You pay interest on the interest, so the debt can double in about 12 years at a rate of 6%. The loan is paid back from the sale of your home when you die or move into care. Read our equity release guide or our lifetime mortgage questions and answers for more.
Which is right for me?
A RIO mortgage may suit you if:
- You have a steady income in retirement.
- You want to keep the debt from growing.
- You want to leave more to your family.
- You have an interest-only mortgage ending and want to stay put.
A lifetime mortgage may suit you if:
- You cannot afford monthly payments, or do not want them.
- You would not pass a RIO lender’s income checks.
- You want a rate that is fixed or capped for life.
- You accept that you will leave less to your family.
Some lifetime mortgages let you pay the interest if you want to, and stop if you need to. This can give you some of the benefits of both. We look at all the options with you, including downsizing and other ways to raise money.
Not sure which suits you?
Leave your name and number and one of our later life team will call you back. You are welcome to have family with you when we talk.
Questions to ask before you decide
- Can I pay the interest now, and what if my income drops later?
- How much do I want to leave to my family?
- Will I want to move in the future?
- Will this affect any benefits I get?
- Have I talked it through with my family?
Talk to our team
We advise on both RIO and lifetime mortgages from our office at Pride Park, Derby, and help clients across the UK. Call us on 01332 300300, request a callback or try our equity release calculator.
Your home may be repossessed if you do not keep up repayments on a RIO mortgage. Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits. A lifetime mortgage is a loan secured against your home.