| RIO Mortgage | Lifetime Mortgage (Equity Release) | |
|---|---|---|
| Monthly payments | Yes - interest only | None required |
| Interest rate (typical) | 4.69–5.39% fixed | 5.79–6.49% MER |
| Interest treatment | Paid monthly - balance unchanged | Rolls up and compounds annually |
| Loan balance after 10 years (£200k) | £200,000 | £351,000-£375,000 |
| Effect on inheritance | Minimal | Significant - compounding erodes equity |
| Income requirement | Yes - to service interest | No |
| Minimum age | 55 | 55 (some from 50) |
| Maximum age | None (specialist lenders) | None |
| FCA regulation | MCOB - residential rules | MCOB 8 - equity release rules |
| Equity Release Council | Not applicable | All members offer no-negative-equity guarantee |
When a RIO Mortgage Is the Better Option
When Equity Release May Be the Better Option
The Most Important Question
The decision almost always comes down to one question: can you comfortably service the monthly interest from your retirement income without it becoming a financial burden?
If yes, a RIO mortgage will almost certainly cost you less over time, preserve more equity, and have a smaller impact on your estate. If no, equity release removes the monthly obligation entirely at the cost of interest roll-up.
We will model both options for you and present the full 10, 15 and 20-year cost comparison before making any recommendation.